What is Workers' Compensation Insurance?
Workers' compensation is an insurance system, mutually beneficial to both employees and their employers. It serves two basic purposes:
To provide benefits to employees who have suffered a work-related injury or illness; and
To protect employers from costly litigation over claims of work-related injuries and illnesses.
Michigan's workers' compensation program is regarded as one of the strongest in the nation.
Benefits to the injured employee can include one or more of the following:
Appropriate medical treatment
Partial replacement of lost income in cases where an employee is unable to work for more than seven days (or death benefits paid to dependent survivors in the event of a fatal injury or illness); and
Vocational rehabilitation so the injured worker can return to gainful employment as quickly as possible.
Workers' compensation is the oldest form of no-fault insurance. First established in Germany in 1856 and adopted soon after by England and most of Western Europe, workers' compensation insurance was enacted in Michigan in 1912. By 1920, all but eight of the other states had passed workers' compensation laws.
Workers' compensation is "no fault" in the sense that benefits are paid without regard to who or what caused or contributed to an injury or illness that "arises out of, or in the course of, employment." Before this insurance system was established, an employer could be sued for negligence and could only defend himself/herself against such lawsuits by proving that the employee was at least partially at fault, that a fellow employee contributed to the injury, or that the employee assumed the risk of potential injury by accepting the job.