Workers compensation Insurance (also known as workers' comp ) is a form of insurance that provides wage replacement and medical benefits for employees who are injured in the course of employment, in exchange for the mandatory relinquishment of the employee's right to sue his or her employer for negligence. The tradeoff between assured, limited coverage and lack of recourse outside the worker compensation system is known as "the workers compensation bargain." While plans differ depending on the state you are in, they usually include weekly payments in place of wages, compensation for economic loss (past and future), reimbursement or payment of medical and like expenses (functioning in this case as a form of health insurance, and benefits payable to the dependents of workers killed during employment (functioning in this case as a form of life insurance). General damages for pain and suffering, and punitive damages for employer negligence, are generally not available in workers compensation plans, and negligence is generally not an issue in the case.
Before the statutory establishment of workers compensation insurance, employees who were injured on the job were only able to pursue their employer through the law. Although employers liability was unlimited, courts usually ruled in favor of employers, paying little attention to the full losses experienced by workers, including medical costs, lost wages, and loss of future earning capacity.
In the United States, most employees who are injured on the job have an absolute right to medical care for any injury, and in many cases, monetary payments to compensate fo resulting temporary or permanent disabilities. Most employers are required to obtain workers compensation insurance. Any employer who doesn't have workers compensation insurance may have financial penalties imposed.
Workers compensation is administered on a state by state basis, with a state board overseeing varying public/private combinations of workers compensation systems. The federal government has its own workers compensation program. In the vast majority of states, workers compensation is solely provided by private insurance companies.12 states operate a state fund (which serves as a model to private insurers and state employees), and a handful of state-owned monopolies.
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