Understanding Workers Compensation Insurance

What Is Workers Compensation Insurance?

Workers’ compensation insurance is an insurance policy that represents a compromise between business owners and their employees. In exchange for medical coverage and wage replacement, employees essentially give up their right to sue employers for workplace injuries and diseases. Workers’ Compensation Benefits are just that – an insurance claim – you are NOT suing your employer.  Coverage is determined by the state, so each state’s workers’ compensation requirement is different. Some states mandate coverage for even one employee, while others require coverage once a business hires a certain number of employers, generally between three and five.

While workers give up their right to sue for their occupational illnesses and injuries in most cases, there are situations when employees can bring a civil suit. In Virginia, this is called a Third Party Personal Injury Claim.

Who are the Insurance Companies I may encounter for a work injury claim?

• Sedgwick Liberty Mutual
• PMA Gallagher Bassett
• The Hartford State Farm
• Ace American/ ESIS VA Corp
• Travelers Chubb
• AIG Risk Management

What Does Workers’ Compensation Insurance Cover?

Workers’ compensation covers employees’ injuries and illnesses by reimbursing a portion of their lost wages and the cost of medical care. However, not all injuries that happen at work are considered workplace injuries. Employees only receive benefits if their injuries occur in the scope and course of their employment.

In Virginia, an injury must be a “specific immediate event”. It can’t happen gradually or due to repetitive motions.

Occupational Diseases:  

Virginia requires that employees demonstrate that their illness resulted directly from work (for example: chemical exposure) and getting a diagnosis and medical documentation from a physician. Cases of Occupational Diseases can be difficult so always consult with a lawyer.

Pre-Existing Conditions:

Virginia Workers Comp can cover injured workers who have had a pre-existing injury if the prior injury was aggravated or exacerbated by a work place accident. Sometimes insurance companies like to downplay this and lead injured workers to believe that since they had an injury before, they are not entitled to workers compensation benefits for the new injury.  Injured workers with pre-existing injuries can face a difficult battle in these circumstances so again, always consult a lawyer!

• What Injuries may be Excluded from Workers Compensation Coverage in Virginia?
• Goofing around/horseplay
• Commuting to work
• Under the influence of drugs or alcohol
• Not wearing appropriate safety gear
• Participating in voluntary work-sponsored events
• Normal Activities of everyday life (like walking, bending, kneeling)
• Repetitive or Cumulative Trauma Injuries (pain due to constant lifting or bending)

What if My Employer doesn’t have Workers Compensation Insurance?

Employers who are required to carry workers comp insurance coverage and fail to do so or let their policies lapse can face penalties.

Virginia Workers’ Compensation Insurance Laws Penalties for Noncompliance

Virginia employers who fail to carry workers’ compensation insurance can face civil penalties of up to $250 for each day of noncompliance, up to a maximum of $50,000. In addition, employers who are noncompliant could be charged with a misdemeanor for intentional violations, held liable for employee compensation, or could even be forced to stop operations.

The Uninsured Fund

Virginia has what is called the Uninsured Fund for folks who were injured on the job in a situation where their employer failed to carry proper insurance. The Uninsured Fund can pay medical bills and lost wages for injures that normally would be paid by the workers compensation insurance provider when there is no insurance to collect from.  This process can be lengthy. The Uninsured Fund always denies the claim and the injured worker has to wait for a hearing in order for the Commission to determine if they were injured in the course and scope of their employment and qualify for benefits.  The Commission makes this determination by way of a hearing and therefore, the Uninsured Fund will not pay any benefits until the hearing takes place and benefits are formally awarded.

What if I’m an Independent Contractor?

Independent contractors are not covered by workers compensation insurance.  Contractors are not under the direct management of an employer, make their own time, pick their jobs and supply their own supplies – including proper insurance coverage.  Make sure that if you are not an independent contractor that you are classified as an employee as there are some employers out there who like to misclassify employees as contractors in order to side step paying for proper insurance coverage! However just because you may be labeled as an independent contractor does not mean that you are actually an independent contractor who can’t get workers compensation benefits. The rules of who is an independent contractor control whether the Virginia Workers Compensation Commission will determine if you are an independent contractor or an employee.