For more than 100 years the American workers compensation system has provided businesses and their workers with a level of security. Every state—except for Texas, where the system is still voluntary—requires employers of a certain size to carry workers compensation insurance.
Should a serious work-related illness, injury or even death occur, this state-regulated insurance system provides for medical expenses and loss of wages for the employee while providing protection against liability claims for the employer. In certain situations, however, a different coverage approach is required, and it is important for some businesses to consider obtaining occupational accident insurance vs workers compensation.
Consider Your Need
Not every employee is eligible for workers compensation. Independent contractors, the so-called 1099 employees, cannot be included in the system. Paradoxically, however, the employer is still ultimately responsible for an injury or illness suffered by the employee during the course of business.
Occupational insurance is designed to provide protection for both employer and employee. Plans are highly customized, and businesses can determine payment limits. Typically, an accident policy includes:
- Medical claims payment for single incidents
- Accidental death and/or dismemberment payments determined by a formula that considers a 1099 employee’s annual earnings
- Disability benefits for a prescribed amount of time
The Bottom Line
When considering occupational accident insurance vs workers compensation, it is important to remember that workers comp offers far greater protection against potential liability claims. Accident insurance, however, is a cost-effective solution for those employees that may slip through the cracks.