It is expected that businesses will do all they can to ensure that the work environment they have created is safe for their employees. Accidents do happen, however, and when they do having a sound workers’ compensation policy is the key to protecting your business and your employees.
Purpose of Workers’ Compensation
Workers’ compensation is an important part of your business's employee benefits package. This aspect of business insurance protects on two fronts. First, it protects your employees from legal complications resulting from an injury to someone at work. It also ensures that workers will receive the medical care that they need in the event of an injury, and that they will receive a portion of their regular income until they are able to return to work.
Workers’ compensation provides benefits to employees no matter who was at fault when the accident occurred. Even if a worker is killed while performing his or her job, workers’ compensation insurance will provide death benefits to the dependent family of the employee.
A Brief History of Workers’ Comp
Believe it or not, workers’ compensation has been around for centuries. Some of the earliest evidence of a type of workers’ compensation can be found in the cuneiform tablets detailing the Law of Ur, a city-state in ancient Sumeria. Throughout the medieval period and later into the Industrial Revolution era, workers’ compensation laws became more stringent as workers’ rights became more of an issue.
One of the most influential forces behind the advent of current workers’ compensation is the Prussian (German) Chancellor Otto von Bismarck. Though he was certainly not considered a humanitarian, Bismarck was instrumental in the development of the Employers’ Liability Law of 1871, and later the Workers’ Accident Insurance of 1884 which created the first modern system of workers’ compensation.
Workers’ compensation law spread across Europe, appearing in Great Britain in 1893 in the form of the Workers’ Compensation Act. Then it moved onward across the Atlantic to the United States. The first comprehensive workers’ compensation law was put into effect in Wisconsin in 1911, followed by nine other states that year. The next year saw thirty-six more states pass regulations to protect employees, with Mississippi becoming the final state to pass legislation in 1948.
The Structure of American Workers’ Compensation
In the United States, workers’ compensation coverage is always fully funded by the employer, either by setting up self-insurance accounts for employees or by the purchasing of commercial insurance policies. Claims are generally handled by compensation boards created by the state's legislature. In a handful of states, claims are taken directly to the courts. Each states’ criteria for what constitutes an injury varies, with a distinction made between injuries that impair someone and injuries that disable.
Today's workers’ compensation system is relatively unchanged from the system that began in the early 20th century. Some recent laws, such as the Americans with Disabilities Act, have resulted in changes and require that employers make reasonable modifications to their businesses to allow persons with disabilities to be employable. Defining disability is a bit unclear, however, making it difficult for companies to know if someone has a disability or not.
Workers’ compensation is one of the most valuable insurance protections a business can have. Protecting employees from the harmful effects of accident, injury and death also protects the business itself. Though there will likely be changes to the system in the future, workers’ compensation will continue to be an important part of any sound business insurance policy.
Poms & Associates offers a broad range of business insurance and brokerage services and provides the most up-to-date information on workers’ compensation insurance policies, as well as additional coverage options. For more details about the basics of business insurance policies, and to find out how Poms & Associates can help you choose the right workers’ compensation package for you and your business, please visit our website or contact us.