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Additional Insured Workers Compensation: What Employers Need to Know

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If you are an employer with one or more employees, you are required by law to have workers’ compensation insurance, at least in most states. 

Workers’ comp reduces your risk of being sued by employees for injuries sustained due to workplace accidents. And instead of you digging into your pocket to pay for unexpected medical expenses, this coverage provides medical care and financial protection for any employee injured in the line of work.

That said, it is important that you understand the laws and regulations governing workers’ compensation to help you avoid issues in the future. That’s because this type of insurance differs from general liability or other types of business insurance in a lot of ways.

One of the top concerns for most employers is whether additional insured is accepted in workers’ compensation

What is Additional Insured?

In insurance, additional insured refers to any person or group other than the policyholder covered under an insurance policy. Now, the terms of coverage for an additional insured are not always the same. It may cover the person for one kind of event. Or it could be a blanket endorsement where the additional insured enjoys the same coverage as the policyholder for the entire policy duration.

Additional insured is common in business liability insurance and is usually between contractors or subcontractors and clients/ businesses. In this case, the contractor enjoys coverage, without paying the insurance premiums, within the scope of their work for the policyholder. So, work outside of that won’t be covered by the policy.

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Additional Insured Workers Compensation: Is it Allowed?

Unfortunately, you cannot add additional insured to workers’ compensation insurance. And for good reasons. You see, additional insured complicates the insurance process quite a bit. 

For one, if you were to add a contractor to your worker’s compensation policy, you unknowingly give all of their employees the right to claim compensation for injuries under your policy. In short, you are assumed to have taken responsibility for the other business’ workers’ compensation liabilities.

Secondly, relevant state government authorities follow up with employers and their workers’ compensation providers to ensure compliance. So, any organization listed as an additional insured workers’ compensation policy would be seen by the law as part of your workforce. 

Consequently, all of their employees would be assumed to be under you. If that same contractor carries workers’ compensation for their employees, then it would bring up issues with the state as it would be viewed as duplicate coverage.

So, because of these complexities, additional insured is not usually accepted in workers’ compensation. However, it is a common feature in general and property liability insurance.

Workers’ Compensation is Designed Only Covers Your Direct Employees

Workers’ compensation is not only required by law in the majority of states but is actually an asset for your business. It can save you from a lot of financial repercussions following employee injury. 

That said, an additional insured is not accepted in workers’ compensation as this type of liability policy only covers employees working directly under you. However, if interested, you can look more into general liability insurance.

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