Understanding Exclusive Remedy in Workers’ Compensation Insurance

The risk of employees getting hurt or falling ill on the job is one of the many liabilities that businesses face every day. With workers’ compensation insurance, your staff is covered for benefits they might need if they suffer an injury or illness due to work. However, there is more to workers’ compensation insurance than simply protecting your employees.

The Basics

Most businesses across the country are required to have workers’ compensation coverage for their employees. The specific mandates that determine which type of business operators need to have a workers’ compensation policy vary from state to state. However, it is important that you properly understand what this coverage entails.

What Is an Exclusive Remedy?

Besides covering the employees for work-related injury or sickness, workers’ compensation also protects the employer. It protects them from being sued by their employees in exchange for coverage and protection for the employee if an injury or illness occurs on the job. This exchange is often called an “exclusive remedy.”

After being compensated for lost wages and medical bills, the injured worker cannot claim any additional remedy from their employer. This provision helps to check the number of unnecessary workplace injury lawsuits, saving the employer from unnecessary lawsuits.

Exceptions to Exclusive Remedy

An exclusive remedy is beneficial, but it is not absolute. As an employer, you should be familiar with a few crucial exceptions to this provision, which usually vary by state:

  • Lack of workers’ compensation insurance– If your employee gets injured on the job while you do not have workers’ comp coverage, they have the right to sue you. Your business could be held liable for losses incurred, including medical costs and lost wages.
  • Insurance fraud– Any employer who falsifies or attempts to conceal the facts about an injured worker to their workers’ compensation insurer is committing insurance fraud. This fraudulent conduct exempts them from the exclusive remedy protection, and an injured employee can sue them for damages.
  • When third parties are liable for worker injury– Some companies involve third-party businesses in their operations, such as contractors. The use of equipment bought from a third party may also introduce third-party liability issues that are not covered by the exclusive remedy.
  • Employer negligence– An employee can sue for injury damages suffered because of their employer’s negligence. They would need to prove that unsafe working conditions exposed them to their on-the-job injury or sickness.

Protecting Your Business

The exclusive remedy provision does not always guarantee that an injured employee won’t legally sue you for a work-related injury. Here are some practical measures you can put in place to maximize the provision’s protection when one of your employees is injured at your workplace:

  • Update your workers’ compensation insurance-Keep paying your workers’ compensation premiums regularly to avoid termination. You can even set auto payments to avoid delays.
  • Train workers on safety-The lack of proper employee training and safety prevention are some of the biggest contributors to workers’ compensation claims. Workplace safety programs are effective as evidenced by the fact that workers’ comp claims reduced by 60% during the first forty years of OSHA’s establishment.
  • Inspect the work environment– The work environment is susceptible to daily changes. Conducting workplace safety inspections regularly can help identify and eliminate hazards, protecting you from negligence claims.
  • Avoid fraud-Be transparent with your insurer regarding work-related injuries to avoid cancelling your exclusive remedy protection.

As an employer, it is important to meet your legal obligations regarding employee safety and workers’ compensation insurance. If you have any questions about protecting your business and employees with the right insurance coverage, contact the experts at Kneller Insurance Agency today. We can help you address your insurance coverage needs.

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