Understanding the difference between workers’ compensation and insurance is key to protecting employees and businesses. Each type of coverage has a specific purpose. Knowing what they cover and why the differences matter helps ensure everyone stays protected.
What is workers’ compensation?
Workers’ compensation is a state-mandated program. It protects employees who get sick or injured while on the job. It provides coverage for medical care, wage replacement, and rehabilitation. This no-fault system ensures employees receive benefits, regardless of who caused the injury.
Understanding your work status is important when determining your eligibility for workers’ compensation coverage. New Jersey law (N.J.S.A. 34:15-70) requires almost all employers to carry workers’ compensation insurance. This includes insurance for temporary workers. Depending on their job arrangements, independent contractors and some domestic workers may not receive coverage.
How is insurance different?
Insurance includes a variety of policies, such as health, liability, and property insurance. People and businesses buy these policies separately to protect against different risks. For example, health insurance covers medical expenses unrelated to work injuries. Businesses can purchase liability insurance to safeguard themselves against claims of negligence.
General insurance covers a wider range of situations. These policies are not always required by state law, and their coverage can vary based on the provider and the needs of the person or business.
Why does the difference matter?
Knowing the difference between workers’ compensation and insurance helps you understand what coverage you have depending on the situation you are experiencing. This understanding supports informed decision-making and helps you select the right coverage for your needs.