Workers Compensation Compared to Non-Subscription
Why would a company decide to go bare on Workers Compensation Insurance in Texas? Cost? Because it’s not required? A bad memory of comp in the 1980’s? Whatever the reason may be, the reasons to carry workers compensation are much more compelling that the reasons to carry occupational accident. If cost is your issue, you need to understand that through the use of medical networks, deductibles, and schedule credits, Workers Compensation can be the same price as or less than an occupational accident policy. Swingle Collins and Associates writes many of their clients in Texas area for less than what they were paying in occupational accident coverage. Texas is the only state that does not require an employer to provide statutory worker’s compensation for work related injuries or illnesses. Whether an employer self funds the risk or purchases an occupational accident policy, the employer is classified as a “non-subscriber”. There is no direct substitute for Workers Compensation. An occupational accident policy is not a good alternative to Workers Compensation in Texas.
Workers Compensation is a no fault coverage, which means the insurance policy will compensate employees for work related injuries regardless of fault. In return for this guarantee, an employee gives up their right to sue the employer. On the other hand, if an employer is a non-subscriber, the injured employee retains the right to sue his/her employer and only has to show 1% negligence of the employer. You are trying to run a profitable company, why would you open yourself up to negligence laws?
Next, consider an employee injured in a work related accident. An occupational accident policy has a preselected limit of reimbursement regardless of salary and it only lasts for a certain period of time (52, 104, 156 weeks). On top of that, the reimbursement is taxed. Workers Compensation pays a state prescribed percentage of the injured workers salary, and the percentage could be paid for a lifetime, non-taxable.
Do you have workers who travel across the country or even to a neighboring state for an occasional job? Most Occupational Accident policies do not cover workers in other states. Workers Compensation will cover the exposure and pay the benefits.
Business Insurance published an article about on occupational accident policy that was denying coverage for migrant workers. There is no migrant worker exclusion on a workers compensation policy.
The final difference an employer needs to consider when going bare is the way the policy language reads. Workers Compensation policy language is standard in the state of Texas, but Occupational Accident policies are written with several variations and will include specific exclusions that reduce or eliminate coverage you might think you have. It is very important to read any occupational accident policy to determine what the policy is actually covering.
Swingle Collins & Associates is available to address and discuss any questions you have.
Authored by Commercial Producer, Lynsie DeCet