Workers' Compensation Insurance
A type of insurance that provides wage replacement and medical benefits to employees who are injured or become ill as a direct result of their job, required by law in most U.S. states.
Overview
Workers' Compensation (often abbreviated as Workers' Comp or WC) is a statutory insurance program that covers employees who are injured on the job. Unlike other insurance types, Workers' Comp is required by law in nearly every U.S. state, and the coverage amounts are set by state statute rather than negotiated between parties.
What It Covers
Workers' Compensation provides four main benefits:
- Medical expenses: Doctor visits, hospital stays, surgery, rehabilitation, and prescriptions related to the work injury
- Lost wages: A percentage of the employee's regular pay during the recovery period (typically 60-70%)
- Disability benefits: Compensation for permanent partial or total disability resulting from a work injury
- Death benefits: Payments to dependents if an employee dies from a work-related injury or illness
Why It Matters for COI Compliance
When a vendor's employee is injured while working on your property, you need assurance that the vendor's Workers' Comp policy will cover the claim. Without it, the injured employee could pursue a claim directly against you as the property owner.
Workers' Comp is particularly important for:
- Construction projects with physical labor
- Maintenance and janitorial services
- Any vendor whose employees work on-site
On the ACORD 25
Workers' Compensation appears in its own section on the ACORD 25, separate from the liability coverage grid. Key fields include:
- Statutory limits: Indicated by "X" in the statutory limits box (coverage meets state requirements)
- Employers' Liability limits: E.L. Each Accident, E.L. Disease — Each Employee, E.L. Disease — Policy Limit
Exemptions
Some states allow sole proprietors, partners, or corporate officers to exempt themselves from Workers' Comp requirements. When reviewing a COI, verify whether any exemptions are noted, as they could leave gaps in coverage.
Example
A roofing contractor sends workers to repair a commercial building's roof. One worker falls and suffers a broken leg. The contractor's Workers' Comp policy covers the worker's medical bills and lost wages. Because the property manager verified the contractor's WC coverage through the COI process, the property manager has no financial exposure from the incident.
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