October 1, 2019

Q&A Workers’ Compensation Insurance

By John Harp, CSP, ARM, Risk Engineering Consultant

WHAT IS WORKERS’ COMPENSATION INSURANCE?
Workers’ compensation insurance is protection for people who get injured or become ill during the course of their employment. It can be the result of an accident—like hurting their back lifting a
case of water—or being injured during an assault.

Workers’ compensation insurance offers five basic benefits:

  • Medical care for the injured worker.
  • Temporary disability benefits to make up for lost wages while the injured employee is recovering.
  • Permanent disability benefits if an employee can’t return to work.
  • Supplemental job displacement benefits, which pay for skill enhancement or retraining if the injured worker can’t return to the job they had before the injury.
  • Death benefits paid to a spouse, children or dependents if the worker dies as a result of job-related injury or illness.

DO I HAVE TO BUY WORKERS’ COMPENSATION INSURANCE?
Workers’ comp is required in every state except Texas. However, your franchise ownership agreement might require you to purchase the insurance regardless of state requirements. The workers’ compensation insurance requirement is dependent on the number of people a company employs. More than half of all states require employers to carry coverage if they have one or more employees. Yes, even a small business needs workers’ comp.

The penalties if you do not obtain workers’ comp insurance can be significant. It can lead to allegations of criminal noncompliance in some states. It can also lead to fines that vary depending on the number of employees, the reason for noncompliance, and the amount of time a business was noncompliant.

WHO DOES WORKERS’ COMPENSATION INSURANCE COVER?
A workers’ comp policy covers employees who’ve become injured or ill on the job, or during the course of employment-related activities. Which employees are eligible depends on each state. Many states require workers’ compensation insurance for W2 employees.

It does not cover employees who have been injured outside their job role, self-inflicted injuries, injuries or illnesses from drugs or alcohol intoxication, injuries caused by fights or horseplay, or injuries sustained after an individual’s employment has been terminated.

HOW IS WORKERS’ COMPENSATION DIFFERENT THAN GROUP HEALTH?
Workers’ compensation insurance is state-regulated coverage for workers who get injured or ill on the job. Group health insurance is coverage for preventative care and medical expenses for injuries or illnesses not occurring from the workplace. Most health insurance policies specifically exclude coverage for conditions covered by workers’ compensation insurance.

SHOULD I OBTAIN WORKERS’ COMPENSATION INSURANCE DIRECT, OR THROUGH A BROKER OR AGENT?
Given how critical it is to protect yourself and your employees it is best that you contact an insurance agent or broker such as AON. They understand the specific risks your business faces and can help you through the insurance company, and support safety in your organization to help control costs.

Essential elements to success your broker or insurance company should support:

  • Safety program activities that are consistent with retail and the types of hazards commonly found in stores.
  • Owner, manager and employee involvement in the safety effort, including regular safety training, safe work procedure review and post-injury management procedures, which are essential to reducing injuries and managing costs.
  • Advocating fair and effective claims handling.

WHAT ARE THE MOST COMMON TYPES OF EMPLOYEE INJURIES IN CONVENIENCE STORES?
The three most common types of workplace injuries are:

  1. Overexertion. Lifting heavy objects like cases of water can lead to strains and sprains. Keeping heavy objects close to the body, bending at the hips, keeping good posture, and maintaining overall good condition can help to prevent these injuries.
  2. Slips, Trips And Falls. This could be from spills, a recently mopped floor, or obstacles on the floor. Since these risks could also injure a customer, it’s essential to maintain good housekeeping,
    keeping things like brooms in their place, using clean mop heads and mopping when there’s less traffic, and using the “wet floor” signs when appropriate, with employees wearing the
    proper footwear.
  3. Assault-Related Injuries. These tend to be the most serious injuries and require constant reminders for employees on how to handle suspected shoplifting or criminal threats. A proper, calm
    response to the situation and an understanding to never leave the store during or immediately after an assault can prevent injuries or save a life.

HOW CAN I AVOID WORKERS’ COMPENSATION CLAIMS OR LOSSES?
All businesses, regardless of size, should have a safety program and ongoing safety training.

  • Consult The Experts. There is plenty of literature about the best ways to mitigate injury risks. MSIG or your Insurance company has knowledge and resources to improve risk control
    in convenience stores.
  • Train Constantly. Don’t just train new employees. Make sure everybody is going through ongoing training sessions so they’re up to date and reminded of safety procedures, especially
    related to crime.
  • Review Your Store For Employee And Customer Safety Risks. Survey your store to identify potential hazards and how they might affect employee safety. After the assessment, follow up to make sure the hazard has either been eliminated or that training is provided to help workers avoid injury.
  • Provide The Right Tools. Simple items like safety cutters, to quality stepladders, can help prevent injuries and illnesses.

HOW CAN I FIGHT WORKERS’ COMPENSATION FRAUD?
Workers’ compensation fraud is unfortunately common. Employees can exaggerate or claim the injury happened at work to receive benefits while staying out of work. In fact, the National Insurance Crime Bureau reports that workers’ compensation fraud costs insurers as much as $7.2 billion annually.

Here are some things you can do to fight fraud:

  • Look For Warning Signs. Was the injury reported on Monday morning? Did it happen immediately following a job termination? Were there no witnesses? Does the claimant have
    a history of suspicious claims? Was the injury reported late? Are they refusing X-rays or other diagnostic tests? These can all be warning signs of fraud.
  • Check Their Social Media Pages. Is an injured worker out on leave but posting photos of themselves lifting heavy objects, running marathons, or skydiving? If so, you’ve likely caught them committing fraud.
  • Assure Your Surveillance System Includes The Vault And Back Rooms. Questionable injuries tend to happen where there are no witnesses or camera coverage.
  • State A Zero-Tolerance Policy For Workers’ Compensation Fraud. Train your employees about the costs of workers’ compensation fraud and explain that it could lead to serious consequences.
  • Encourage People To Share Suspicions. Creating an environment where people can speak out will help detect fraudulent behavior.
  • Let Your Claims Adjuster Know Your Suspicions. When it’s serious enough, the claims staff may hire a private investigator to conduct surveillance. This might determine a situation where the claim can be denied or fraud can be pursued.

SUMMARY
Workers’ compensation insurance is an essential part of your insurance program and provides protection for your employees and the business. Sometimes it can be confusing and in some cases, you may have used it only once or never, but it’s there for peace of mind knowing your injured employee will be cared for without paying out of their pocket, which is why it’s important to choose your insurance company and broker wisely. They are there to support you with this process.

Also, your Claims Adjuster is your expert at navigating the rules and requirements of effectively applying the proper benefits in a timely manner. Contact them when you have any questions.

Key Points

  • Report all work-related injuries or illness within 3 days.
  • Maintain communication with your adjuster.
  • Maintain communication with employees that are on leave or disability.
  • Help make an early transition back to work.
  • Help reduce claims and keep costs down by promoting safety and preventing accidents.

For more information Worker’s Compensation plans, contact:

MITSUI SUMITOMO
NSURANCE GROUP
John Harp, CSP, ARM
jIharp@msigusa.com
908-604-2951
Risk Engineering Consultant

Greg Rice
grice@msigusa.com
513-719-8405
Claims Account Executive