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Occupational vs. Non-Occupational Insurance Coverage

Instructor: Jason Matyus
Occupational and non-occupational insurance plans are insurance differentiated by one plan that pays a person for an accident at work and one that is not at work.

Occupational Insurance

There are laws to tell you have fast you can drive, how much taxes to pay, and even laws to tell you how to treat other people. With all those laws it is hard to imagine there are laws governing employers to employee benefits, but there are laws that do require certain things from employers to be responsible for in employment. One example is the insurance laws. Typically in most states, employers are required to carry insurance on employees that work at least 8 hours a week for the same company. Occupational insurance is defined as insurance provided to those employees injured or killed on the job. Occupational insurance provides coverage for independent contractors, unlike workers compensation that is paid by the employer and mandated in most states.

There are some options for employers that make occupational insurance a good choice. Let's imagine for a second that you own a business like a restaurant or a store. In some states, you can choose to option out of your state's worker's compensation plans. However, they'll still be responsible for any employee hurt or killed on the job. An occupational insurance plan would offer a cheaper option to your employees. However, there are some things you have to consider before choosing one.

1. The limit of liability to carry for each accident.

2. How much of a deductible per accident.

3. How much disability to carry.

4. The amount of death benefits to provide.

It's important to understand as an employer that if you choose the occupational insurance, then you are responsible for the financial difference if your employees' cost exceeds the coverage. Occupational insurance may have a single lump sum available to pay benefits in the event of an accident. Additionally, the occupational insurance policy will have a per accident deductible and a maximum per year payable amount.

Non-Occupational Insurance

A non-occupational insurance policy is one that does not cover an employee for injuries sustained while at work. Employers cover those injuries under workers compensation. For example, imagine that you're at a family reunion and while playing volleyball you fall and separate your shoulder. The injury may keep you out of work for a couple of days. While the injury will prevent you from doing your job for a couple of days, it wasn't an injury that occurred at work. Therefore, it's a non-occupational injury.

Workers Compensation Insurance

Workers compensation insurance is a form of insurance that pays wages and medical costs to an employee hurt at work. In turn, the employee mandatorily gives up their right to sue their employer for pain and suffering related to negligence. There are circumstances that change some of the wording of workers compensation laws. An employee can get more than the allocated amount by workers compensation depending on the state. For example, let's say you were a business owner in New Jersey. Because of the laws in New Jersey, you could be liable for larger amounts of money exceeding the amount of workers compensation if your employee who was injured can prove that your management reckless and intentional. Now let's imagine you were a business owner in Pennsylvania, where the opposite is true. In this case, you'd be completely immune to anything higher than the worker's compensation amount owed to your injured employee.

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