What is Workers Compensation Insurance?

Workers compensation insurance covers an employer in the unfortunate situation that an employee suffers a work-related injury, illness, or stress due to reasons that can include sub-standard working conditions, negligence, and in some cases bullying and harassment. Workers’ compensation is specifically designed to deal with claims made by your workers, similar to how public liability insurance protects your business from claims made by the public. Having a workers compensation insurance scheme in place will give you peace of mind that if an incident occurs, the insurance will cover a portion or all medical and legal expenses including reimbursement for the potential loss of wages.

How does it work?

Normally, a workers compensation claim is filed by the employee to the employer when they believe they have suffered some type of injury or loss. The employer is then required to provide the employee with a workers compensation claim form within 24 hours. Both parties then fill out their relevant parts of the claim and submit it to the insurance company. From here, the insurance company will assess the claim and determine if the employee is indeed eligible to receive workers compensation benefits.

What are the legal requirements of workers compensation insurance?

Unlike many other types of business insurance schemes, workers compensation insurance is largely compulsory in Australia for all employers that hire one or more employees. Very few industries are exempt from having workers compensation insurance but that doesn’t mean it’s still not a good idea to be covered if you are an employer in any capacity.Under the Workers Compensation and Injury Management Act 1981 (WA) employers are required to have a workers compensation insurance policy to cover anyone that is defined as a ‘worker’ by the legislation.The extent of these legal requirements will not only be subject to what state you work in but also the industry. Regardless, if you are an employer in Australia, you are obligated to provide workers compensation insurance.Workcover is the government agency responsible for regulating and administering workers compensation schemes across all states within Australia. To find out the exact legal requirements for your business in Western Australia, visit https://www.workcover.wa.gov.au/ .

Is workers compensation applicable to anyone?

In rare cases, workers compensation may not be required. Some of the occupations that are exempt from workers compensation insurance include:

• Domestic workers
• Sole proprietors
• In some cases, independent contractors

A workers compensation claim can also be denied if the employee making the claim was under the influence of drugs or alcohol when the incident occurred, was acting irresponsibly, injured travelling to and from work, or because of external actions such as food poisoning from something they ate outside of the workplace.

The risks of not having workers compensation cover.

Unless you’re a sole proprietor or your business falls under the very few jobs where workers compensation insurance is not compulsory, then it’s highly likely you are required by law to have a workers compensation policy in place.If your business does not have workers compensation insurance, you will be required to cover all the staff’s expenses out of your own pocket. This could be a costly blow that could potentially sink your business for good.A common oversight businesses make is they think workers compensation insurance is included in their overall business insurance package. This is often not the case and employers can face hefty penalties for failing to have a separate workers compensation insurance policy.According to the WorkCover WA website:“If you don’t have workers’ compensation insurance, your business could be liable for:

• costs in excess of $600,000 in benefits if a worker is injured
• fines of up to $5,000 per worker
• any avoided premiums going back five years
• liability for the cost of any action taken at common law
• legal costs involved in any court action.”

Why workers compensation insurance is so important.

As an employer, you should always prioritise the health, safety, and well-being of your work force. However, as much as you may think that your working conditions are top notch, accidents and employee dissatisfaction can still occur.Every year over a 100,000 workers compensation claims are filed in Australia putting employer liability at an all time high. It’s not only a legal requirement but an essential cover to have to save your business from what could be irrecoverable financial damage due to you being ordered to pay:

• expensive medical and hospital costs
• wages while the employee is unable to work
• compensation for loss of earnings
• sizeable payouts for permanent injuries
• funeral costs and family compensation in the case of death

An effective workers compensation scheme not only ensures that your staff get the protection they deserve, but also safeguards your business from substantial financial loss or bankruptcy if a claim is awarded to the employee.To make sure that you and your business have the requisite cover to avoid costly payouts, speak with one of our expert insurance brokers today.