Workers' compensation

Workers' compensation is a system of employer-provided insurance, required by state law in every state except Texas — where coverage is elective for most private employers — that covers employees who are injured or become ill in the course of their employment. It is a no-fault system: the injured worker does not have to prove the employer was negligent, and the worker's own carelessness generally does not bar recovery.

Benefits fall into four main categories: medical expenses (typically unlimited and not subject to a deductible), disability income to replace a portion of lost wages, rehabilitation costs to help the worker return to employment, and death benefits paid to a deceased worker's dependents. Benefit amounts and waiting periods are set by each state's statute rather than negotiated in the policy.

The tradeoff at the heart of the system is the exclusive remedy doctrine: in exchange for guaranteed no-fault benefits, employees generally give up the right to sue their employer for workplace injuries. Employers buy a workers' compensation policy (or qualify as self-insurers) to fund these statutory benefits; the standard policy also includes employers liability coverage for the rare suits that fall outside the statute. Workers' compensation is excluded from general liability policies and businessowners policies, which is why it must be purchased separately.

Workers' compensation appears on casualty and property & casualty insurance licensing exams, which test the no-fault principle, the four benefit categories, and its relationship to other commercial coverage. It also appears on the CCMA exam, where medical assistants must understand how workers' compensation claims are billed separately from a patient's regular health insurance.