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workers compensation insurance (casualty)

Terms in this set (35)

before the enactment of workers compensation laws, employees injured on the job had to prove that an employer's negligence resulted in the injury. even if negligent, the employer usually could invoke the following common law defenses:

1. fellow servant rule - if the injury was caused by the negligence of a fellow employee, it was no considered the negligence of the employer.
2. contributory negligence - if the injured employee was even partially responsible for the injury, the employee was barred from any right to collect for damages
3. assumption of risk - this asserted that the employee knew in advance the risks associated with the job and had been paid for these risks through his or her salary.

eventually, states began to enact employer's liability laws, diluting some of the common law defenses.

by the early 1900s, states started to enact workers compensation laws. these laws were primarily elective, allowing the employer or employee to pursue the case outside the workers compensation law or to use the fixed-benefit remedies provided under the law. compulsory laws, which mandated that the exclusive remedy for injuries was to be provided under the workers compensation law, were later enacted. this established a form of absolute liability that required compensation for injured workers regardless of fault or negligence. today, works compensation laws are in effect in every state.

in 1970, the federal government enacted the occupational safety and health act (OSHA), which set minimum standards for work safety. under OSHA, individual states could retain jurisdiction over work safety, as long as their standards met the minimum standards establish by OSHA. in addition to the state workers compensation laws, the federal government imposed federal compensation laws for jobs that fall under federal jurisdiction. these programs include the following:

1. the federal employees compensation act covers civil employees
2. the US longshoremen's and harbor workers compensation act provides benefits to crews or vessels, including employees engaged in shipbuilding or repair.
3. the defense base act provides benefits to civilians who are employed on a military base
4. coal miners are provided coverage under the federal black lung compensation insurance program.
5. railroad employees are exempt from the compensation laws in many states. however, the federal employers liability act (FELA), which was passed in 1908, allows injured workers to sue their employer for negligence and removes the common law defenses of contributory negligence and assumption of risk.

today, all employees that are subject to workers compensation laws are required to purchase workers compensation insurance or set up a formal program of self-insurance. workers compensation insurance is most commonly purchased through private insurers.
workers compensation law provisions apply to every person who is self-employed or works for an employer. the following may elect not to be covered:

*the bona fide president, vice president, secretary, or treasurer of a corporation who owns at least 10% of the stock
*a partner or a member of a limited liability company who owns are least a 10% interest of the partnership or company
*a sole proprietor

the following employees are exempt from workers compensation coverage:

*any employee of a private residential household whose tasks are not related to the occupation of the householder
*any employee of a private unincorporated farm when the employee earns less that $1,000 a year, the total net earnings of all farm employees do not exceed $2,500, and whose labor is not related to the trade, business or occupation of the farm
*musicians and performers who work according to a contract
*members of an airplane crew engaged in agricultural spraying or dusting regarded as independent contractors
*volunteer officers and board members of nonprofit veteran, charitable, fraternal, civic, or social organizations
*any real estate broker or salesperson licensed in LA and operating under the auspices of a licensed broker in LA

a person performing a service for another in any trade, business, or occupation covered by workers compensation laws is presumed to be an employee of that person.

every executive officer elected or appointed and empowered according to the bylaws of a corporation will be considered to be an employee of the corporation. this does not apply to executives of the following:

*charitable, religious, educational, or other nonprofit corporations
*state or municipal officers
*any incorporated public board or commission
all workers compensation employers liability policies, which may contain slight variations by different insurers, are based on the national council on compensation insurance's standard policy.

the policy contains an information page, which is the similar to the declarations found in other types of insurance policies. it includes a description of each operation conducted at the insured location. in addition, this page shows which state workers compensation laws apply for part I - workers compensation, and the policy limits for part II - employers liability.

the general section of the policy provides a few definitions that further clarify policy intent. this section states that the policy and all attached endorsements is a contract between the insured and insurer and that none of the policy provisions may be waived without the consent of the insurer. it also defines who is insured (the employer and any partners), workers compensation laws (excluding federal laws), state (US and District of Columbia), and locations (shown on the information page).

approximately 90% of all employees are covered under workers compensation laws. however, each state defines certain classes of employees that are exempt from coverage. for these exempt employees, employers are not required to provide workers compensation benefits, but they can be voluntarily provided.

BI and occupational disease that arise out of or during employment are covered under workers compensation insurance. occupational disease must be caused or aggravated by a condition of the employment. in other words, there must be a direct relationship between the job and the disease. ordinary diseases suffered by the general public are not covered. the following types of injuries are generally excluded from coverage:

*injuries that occur traveling to and from work
*injuries that result from intoxication of the employee
*injuries willfully caused by the employee
*injuries that result from a willful failure to follow safety precautions
*injuries that occur from activities not a part of the job

penalties and/or increased benefits may be required for certain types of injuries, such as the employer's willful failure to provide required safety equipment, or minors injured while illegally employed. these penalties must be paid by the employer because they are excluded under workers compensation insurance.

in all states, medical payments are unlimited. there are no dollar limits or time limits set out to pay for necessary medical and surgical expenses, except possibly for certain types of care.

benefits provide disability income payments for an injured employee's loss of wages. benefits begin after an initial waiting period, but benefits will be paid retroactive to the beginning of the disability if the disability lasts for more than the period of time defined in the policy. benefits are usually expressed as a certain percentage of the injured worker's wages, subject to certain weekly maximums and minimums for temporary total disability and permanent total disability. total disability refers to an individuals total inability to work.

for temporary partial disabilities, which refers to a person's ability to do some work or the need to do alternative work, benefits are expressed as a percentage of lost wages equal to the difference between the wages earned before and after the injury. some states also provide a schedule of benefits for specific permanent partial disabilities, such as the loss of a limb, hearing, or eyesight. these benefits are usually in addition to any other benefits paid.

death benefits usually pay a small amount for funeral and burial expenses, and weekly income benefits to the surviving spouse and/or children. the weekly benefit usually equals a certain percentage of the deceased worker's income. benefits may continue for the remaining life of the surviving spouse or until remarriage.

rehabilitation expenses include vocational training and necessary medical expenses for physical and mental therapy. benefits also include board, lodging, and travel expenses. states may impose weekly or maximum benefits, or limit benefits for certain types of rehabilitation.

all states have enacted what is called a second (or subsequent) injury fund. these funds are designed to pay for any additional benefits that may be required when an employee with a previous injury or disability (whether work related or not) suffers a second injury that causes the disability to be more serious than if there had been no prior disability. for example, an employee with only 1 arm loses use of the second arm, the resulting disability would be much worse, usually resulting in a permanent total disability. without the second injury fund, employers would be subject to the additional liability imposed by such injuries and would not have any incentive to hire disabled employees.
employers liability insurance coverage protects the insured from situations not covered under a state's workers compensations law. unlike the workers compensation coverage part, which does not specifically show the statutory limits provided, employers liability limits are shown on the information page. the basic limit provided is $100,000 for BI per accident, $100,000 per employee for disease, and a $500,000 policy limit for disease (for all disease claims within the policy term). most insurers allow the insured to purchase higher employers liability limits for an additional premium. besides the basic coverage, this section also provides supplemental coverage, which is similar to that found in other policies.

there are several exclusions that apply to employers liability coverage:

*liability assumed under a contract
*punitive or exemplary damages
*employees knowingly employed in violation of law
*injury intentionally caused by the insured
*injuries that occur outside the US, its possessions, or Canada (injuries to a resident temporarily outside these areas are covered)
*damages caused by the employment practices or policies of the insured, including defamation, harassment, humiliation, discrimination, or termination or any employee
*employees who are subject to federal workers compensation or employers liability laws (although coverage is usually available by endorsement)
*fines or penalties imposed because of a violation of state or federal laws
*damages payable under the migrant and seasonal agricultural worker protection act or similar laws

the other insurance clause states that losses will be paid on a contribution by equal shares basis. the limit of liability provision explains that the limits on the information page for bodily injury by accident apply per accident, and bodily injury by disease applies per person subject to the bodily injury by disease policy limit for all losses during the policy term. the final 2 provisions refer to the insurer's subrogation rights and actions against the insurer.