What You Should Know About Workers’ Compensation Limits
No one likes getting injured while working. It can be challenging to deal with since an injury could prevent one from working and give them a permanent disability.
However, depending on the case, an employee will be covered under California’s Workers’ Compensation policy. It gives them financial reimbursement for all fees associated with a work-related accident, including medical costs, lost wages, and other associated payments.
While many movies and TV shows depict an endless amount of money from workers’ compensation cases, there are limits to the payouts. We’ll discuss what they are in today’s article. Continue reading to learn more.
What Are Limits of Liability?
Whether you’re a small business with a few employees or a large corporation, you’re required to carry worker’s compensation insurance for your employees. If an accident were to happen from work-related activities, your employee could be rightfully compensated if their claim is successful.
Traditional commercial insurance policies dictate how much money is paid out per settlement. However, workers’ compensation is different. The state government determines the requirements for its workers’ comp system, which include:
- Which employers are legally required to have insurance
- Fines if you don’t have coverage
- How to report workplace injuries
- Medical care requirements
Also, the limits on worker’s compensation are split into two parts: employees benefits and employer liability.
Part A of a workers’ compensation policy covers employees benefits, which generally include:
- Medical expenses
- Reimbursement of lost wages
These benefits do not have a set limit for how much the employee should be paid. To calculate the amount per case, the Board takes the weekly salary and severity of the injury into account.
Part B of workers’ compensation policies focuses on employer liability if a lawsuit were to occur. So if an employee deemed their employer to be negligent, they might sue their job in addition to receiving workers’ compensation benefits.
However, Part B of the policy would cover legal expenses and possible money awarded to the employee. It’s also important to note that this part of the policy has a maximum payout amount, which employers can choose as they buy insurance.
How Do Payouts Work?
When choosing coverage for Part B of your worker’s compensation policy, there are set amounts you can choose for the amount you want to payout. For example, standard coverages are usually $100,000/ $500,000/ $100,000.
The first number is payout per accident, the second is paid per policy, and the last is paid per employee. Once an employer reaches these limits, the expenses would fall to another policy, or they would have to pay out of pocket.
While it is rare for employer liability claims to happen, it’s essential to make sure you understand the different policies and the right one to choose for your business.
Choosing Your Employer Liability Limits
As we stated above, the standard employer liability limit is typically $100,000/ $500,000/ $100,000. But there are times when a policyholder may want to increase their limits because of contractual obligations or their other policy insists.
For example, a freight company may require all subsidiaries to set their employer liability limits at a certain level, or the general policyholder may ask for an increase for similar reasons.
So it’s common to see policies increases to $500,000/$500,000/$500,000 or $1 million/$1 million/$1 million.
Since the policy is rarely used, the cost to increase the limits doesn’t cost businesses much. But since each situation is different, you’ll need to consult with the necessary parties before choosing your limits.
Have you been terminated from your job while on workers’ comp and don’t know what to do? Invictus Law has the answers to all your questions
How Much Does California Workers’ Comp Insurance Cost?
In California, estimated workers’ compensation rates are $1.70 per $100 in payroll. However, these costs are based on several factors, which include:
- Your location
- Number of employees
- Type of industry and associated risks
- Previous claims history
- Coverage limits
To get coverage, you can buy it from a private insurer, the California state fund, or self-insure your business. But if you want to self-insure, you’ll need to be in business for at least three years and follow specific requirements outlined by California law.
Are There Penalties For Not Having Workers’ Comp Insurance?
According to California law, all businesses need to have workers’ comp insurance. If you don’t, you’ll be subjected to severe penalties such as:
- A stop order on your business, which if violated, could result in a fine of $10,000 or more and prison time for up to a year
- A lien could be filed against an employer’s property by the Uninsured Employer’s Benefit Trust Fund
- The Division of Labor Standards Enforcement issues another penalty which would be twice the amount of the insurance premium the employer should have paid
So if a worker was injured and the employer had no workers’ comp insurance, they would be liable for the penalties above. But another fine of $10,000 or $2,000 per employee would have to get paid depending on the case’s nature.
Now You Know About Workers’ Compensation Limits
As you can see, workers’ compensation insurance is a requirement for all Californian businesses. It’s not just there to protect employees if there was an on-the-job accident. It’s also set limits to protect enterprises from paying extensive sums.
Without it, you’ll have to pay fines and could be forced to halt your services. Avoid that by ensuring you have workers’ comp insurance with updated policies.
To learn more about workers’ compensation laws or how you can file a claim, contact Invictus Law today!