Worker's compensation insurance also referred to as worker's comp or workmen's compensation is an insurance plan provided by the employer (per the conditions set by state law and can differ from state to state) that protects employees who become injured or contract a disease during the timeframe of their employment. It provides benefits for lost wages, medical coverage and/or medical expenses, and disability coverage.

Benefits are paid for job related injuries, disability, or death and payments are administered by the state agency not the employer. If an employee suffers a workplace injury, workers' compensation becomes the substitute for an employee's medical insurance along with providing some level of income if the employee is unable to work temporarily or permanently disabled which was a resultant of the workplace injury or disease.

Worker's compensation is defined as no-fault insurance for employees because liability issues are irrelevant. Payments are typically made to the employee whoever is at fault or found negligent. As a result for this automatic coverage the employee gives up the right to sue employers for such items as pain, suffering, and punitive damages.

However, there are some limitations to the no-fault rule that may negate coverage for the employee. These limitations are:

• Injuries caused by the abuse of drug or alcohol,



• Injuries suffered outside the scope of employment,



• Injuries endured while the employee was involved in committing a serious crime,



• Self inflicted injuries which includes those injuries caused by a person who initiates a physical confrontation (i.e. the employee who starts a fight).



• Injuries endured when the employee’s conduct violates company policy against the use of alcohol or illegal drugs in the workplace.

Because workers' compensation is an insurance-based program the employer pays the entire expense premiums into the state sponsored fund, although some states allow large employers to self insure their employees under their own insurance program.

Also, some states allow smaller companies with four or less employees may not be required by the state program to provide worker's compensation insurance. In this instance, these employees would not be covered under a workers' compensation program. Furthermore, certain jobs may also be excluded from the worker's compensation program. Many states typically exclude mandatory coverage for domestic and/or agricultural workers and those employees who work for religious organizations.

This benefit begins on the first day of work and employers must provide employees with notices about their rights, especially if the employee falls within a non-coverage classification as described above. Also, when an employee informs or the employer is made aware of an injury or illness, the employer must notify the affected employee(s) in writing of their worker's compensation rights. Once notified, the employee has a limited time period to notify the employer of their intensions for submitting a workers compensation claim. This time period can vary by state, and can only be extended or waved in an extraordinary case. Failure to notify the employer can result in loss of making a worker's compensation claim. However, if the employer fails to provide the employee in writing of the employee's worker's compensation rights, the starting time period for filing a claim is automatically extended until the employer provides the written notice.