If you’ve ever worked with Workers’ Compensation Insurance, you’ve probably come across the term “indemnity.” So let’s take a look at both Workers’ Comp Insurance and indemnity entail.
In Pennsylvania, Workers’ Compensation (WC) Insurance is “mandatory, employer-financed, no-fault insurance which ensures that employees disabled due to a work-related injury or disease will be compensated for lost wages and provides necessary medical treatment to return them to the workforce.”
If an employer fails to carry WC and an employee suffers a work-related injury, they will be required to reimburse the PA Department of Labor & Industry for money paid by the Uninsured Employers Guaranty Fund concerning the claim, plus interest, penalties, and fees. In addition, an uninsured employer may face civil and criminal risks.
A misdemeanor conviction could result in a $2,500 fine and up to one year of imprisonment for each day the employer is in violation. Felony convictions could result in a $15,000 fine and up to seven years in prison for each day the employer is in violation.
An indemnity benefit is the money an injured employee receives for lost wages while they are unable to work due to a work-related injury or illness. There are basically four different types of indemnity benefits.
NOTE: When discussing indemnity, you may also hear the term “maximum medical improvement” or MMI. MMI is “a legal concept where no further significant recovery from or lasting improvement to a personal injury can be reasonably anticipated, regardless of subjective complaints from the employee. In essence, additional medical care and treatment may still be required to keep the employee in a stable condition, but no noticeable improvement will take place in that medical care.”
Workers’ Compensation Insurance can be complicated, but the more you understand it, the more likely you can lower your WC costs.
The agents at American Insuring Group specialize in Workers’ Compensation Insurance and would be happy to work with you to explain the ins and outs of this – and all your commercial insurance needs – and help ensure that you have the right coverage at the lowest cost.
Contact us today at (800) 947-1270 or (610) 775-3848, or connect with us online.