Clients often confuse Workers’ Compensation and Health Insurance.  I often get asked, what will I get paid if I have this sort of claim.  Often times, we are asked, is the Workers’ Comp a catch all covering all conditions not covered by other policies?  The answer is obviously, no; however, clearly defining what is covered can sometimes be tricky and varies on a State by State basis.

As with any insurance policy, coverage gets triggered when the Proximate Cause of Loss is covered by the policy in question.  So in a exaggerated example, Workers’ Comp benefits will get triggered when an employee gets hurt on the job, not when skydiving on vacation.  However, there are very many scenarios where things are not nearly as clear cut.  For example, if as a result of a covered claim an employee took medication and got into an accident as a result.  Under the strict definition, the Proximate Cause of Loss may be a covered cause of loss; however, many States limit the Carriers responsibilities when an employee is intoxicated or willfully was engaged in misconduct.

On the other end of the spectrum, in 2006 our office issued a Workers’ Comp policy in New York for a blue-collar business.  The client had an employee that changed out of their uniform; and walked a mile to the bus stop to wait for their bus home.  After waiting over twenty minutes, the employee unfortunately had a heart attack and died.  His estate brought a Workers’ Comp action against the employer’s carrier.  The judge put intense pressure on the Carrier to offer a settlement even though it did not seem that it was a covered claim – and they complied.

It is clear, that in actuality, coverage is not necessarily dispersed as intended, some times it is withheld more than it could be & other times offered when it should not be.  That is the imperfect world we live in.  From an employers standpoint, how can one protect themselves as best as possible?

Firstly, it is a great idea to have a Workers’ Compensation policy even if you are in a State that does not require it; or if you are below the employee count requirement.  In many of those domiciles, even if you are not Statutorily required to have the policy, you ARE responsible for the medical bills of the employees hurt on the job.

In some State (like New York) there is a requirement to also have a Short Term Disability Policy.  This covers the employees who get hurt away from the job.  Unlike Workers’ Comp, you are charged by the number of employees and their sex.  The Statutory benefits are 50% of employee weekly payroll maxed at $170 per week – that is very little.  However, carriers like Shelterpoint, allow you to buy (very inexpensively I might add) up to seven times that benefit.  A great bonus to an employee who gets hurt.

Most importantly, if you have a good business to run; have an outside expert review what you have and offer what is available so that you can protect your employees and your business.


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Marc Rovner