What Does Occupational Accident Insurance Mean?
Occupational accident insurance is a type of insurance that provides benefits to employees or the families of employees who are injured or killed in job-related accidents. It can be used to offer benefits to independent contractors and to classes of employees who are not covered by a government operated workers’ compensation policy.
Safeopedia Explains Occupational Accident Insurance
In some jurisdictions, an employer may provide occupational accident insurance in lieu of participating in a state-run workers’ compensation insurance plan. Whereas the benefits provided to employees under workers compensation policies are defined according to statutory law, the benefits provided by occupational accident insurance vary by policy. This allows the cost of the policy and benefits provided to be calibrated to the employer’s perception of workplace risk.
Access to occupational accident insurance varies widely by jurisdiction. In the United States, only Texas and Oklahoma allow employers to fully opt-out of workers’ compensation policies. Employers in these states may use occupational accident insurance to take out policies that cost less than paying into government-run workers’ compensation plans.
The use of occupational insurance does not exempt the employer from any legal obligations to provide an employee with the full compensation benefits that they are entitled to under health and safety laws. If an employer’s liabilities exceed the cost covered by their policy, the employer is fully responsible for paying the remaining amount out-of-pocket. As such, occupational insurance plans do not grant the employee guaranteed coverage of necessary medical expenses, legal fees, and lost-income benefits, as workers' compensation does. Because occupational accident insurance does not provide employees with a statutory guarantee of benefits, employers who use this type of insurance face greater potential legal liabilities than those who use workers compensation.