Occupational Accident Coverage and All You Need to Know About It

A huge boon to employees everywhere, occupational accident insurance covers employees in the case of injury or even death, if these circumstances are job-related. Considering that 2.3 million people die every year from work-related accidents and injuries, occupational accident coverage is quickly becoming a necessity around the world.
occupational accident insurance


What Exactly is Occupational Accident Insurance?

Occupational accident insurance provides coverage in the cases of work-related injuries and death to those employees who are not already covered by a workers’ compensation policy.

This coverage is typically more flexible and cheap than a workers’ compensation policy. Employers can choose what coverage they need insurance coverage from the following types:

  • Temporary total disability
  • Permanent total disability
  • Survivors benefit
  • Accidental death benefit
  • Accidental dismemberment
  • Accident medical expenses
  • Non-occupational accident benefit
  • Hernia and hemorrhoid benefits
  • Chiropractic benefits
  • Passenger accident benefits

Additionally, unlike workers’ compensation where statutory benefits are provided, occupation accident insurance policies involve making the following choices:

  • The liability limit per accident
  • The deductible amount per accident
  • The disability-coverage level that is to be provided
  • The death-benefits level that is to be provided

Employers then become responsible for any legal obligations to employees who are not covered under the occupational insurance coverage. Due to this, it becomes important to choose the right coverage options, failing which employers could face heavy financial burdens.

Occupational Accident Coverage vs Workers’ Compensation Coverage

Both occupational accident coverage and workers’ compensation are highly similar with regard to the purpose they serve; however, there are differences to both:

  • occupational accident coverage is mainly intended to cover independent contractors and in rare cases (such as the states of Oklahoma and Texas) as a substitute for workers’ compensation insurance, whereas workers’ compensation insurance covers employees.
  • Occupational accident insurance is not required by law, whereas workers’ compensation insurance is required by law in the majority of US states.
  • Occupational accident coverage is less expensive than workers’ compensation coverage.
  • Limits, deductibles, and payout amounts are decided by the motor carrier, whereas workers’ compensation benefits are fixed by law.

Why Choose Occupational Accident Coverage?

Many employers choose occupational accident insurance over workers’ compensation policies for the following reasons:

  • Cheaper Alternative: Workers’ compensation is a government initiative and therefore, employers can still opt out of the law that governs it. However, this doesn’t take away the legal obligation the employer has towards an employee who suffers work-related accidents. In such cases, it is cheaper for the employer if he has an occupational accident insurance coverage as it fulfills all his obligations and works out cheaper.
  • Owner Operator Coverage: This point pertains to the trucking industry where many companies use occupational accident insurance for truck owners/operators who are not actually employees, as sometimes, the latter may try to assert that they are employees and make use of workers’ compensation when in fact, they are not employees.

What Does Occupational Accident Coverage Cover?

Like we said earlier, occupational accident insurance lets you choose the kind of coverage you receive. Employees under this insurance still receive the same benefits as a workers’ compensation policy which means employers have the same liabilities in both cases (they could offset this by self-insuring against workers’ injuries or accidents).

The coverage under occupational accident insurance is divided into 3 main components:

  • An amount to pay for medical expenses of a single accident.
  • Accidental death and dismemberment benefits which are generally limited to a multiple of the annual salary of the employee in question.
  • Disability benefits that form part of a disabled employee’s salary (but only for a certain period of time).

It should be noted that disability benefits would help an independent contractor with truck payments, insurance, rent/mortgage payments and living expenses.

It is also possible that instead of the above 3 components, the policy will offer a single combined limit and a lump sum payment for all 3 cases. These 3 components are also accompanied by a per-accident deductible amount and a maximum payable amount on an annual basis.

Trucking is one of the most popular professions and highly profitable industries in the United States. However, the risk of accidents and injuries in the profession is incredibly high and in such cases, owners/operators who are independent contractors are at a disadvantage as they cannot be covered by workers’ compensation insurance. For such people, the occupational accident insurance is an ideal choice for the following reasons:

  • Employers can still offer benefits to independent contractors for any injuries or accidents while under dispatch or contract.
  • There is an increased likelihood of independent contractors wanting to work with an employer who provides these benefits than with one who doesn’t.
  • The employer is protected in case an independent contractor tries to assert themselves as an employee to gain workers’ compensation benefits, after an accident.
  • There is a reduced chance of lawsuits due to accidents if a compensation is already in place.

Contingent liability coverage can be purchased only after the occupational accident insurance is already in place. It provides coverage in the case of an owner/operator initiating a claim of being an employee, rather than just an independent contractor, in order to receive workers’ compensation policy benefits. Thus, contingent liability coverage covers all legal costs in this situation and if it is successfully proved that the employee is indeed an independent contractor, compensates the employer for any additional expenses that may have been incurred (but only up to the policy’s limit). Contingent liability coverage can be considered an extra layer of protection for employers.

  • A policy that can bundle both occupational accident coverage and contingent liability
  • Flexible coverage for different types of situations
  • Passenger accident and non-occupational coverages
Though the cost varies depending on several factors, the primary factor is how many independent contractors employers wish to insure. The secondary factor would definitely be the insurance company employers choose, as different companies would offer different quotes and different premiums which are, in turn, influenced by several other factors. Additional factors that influence premium rates would include past records of safety, policy limits and the deductible amount.

The best thing employers can do is shop around. In a competitive industry, companies may offer lower premium rates to build a larger customer base.

Occupational accident insurance does the same job as a workers’ compensation coverage and at a cheaper premium. It can be highly beneficial to employers by performing the dual functions of preempting lawsuits and attracting high-quality drivers with their benefits. It is important though, to find a policy that is flexible and can include various situations in its purview as occupational accident coverage isn’t an all-inclusive policy.