What is the main purpose of a workers' compensation policy?

The main purpose of a workers' compensation policy is to replace lost wages and cover injuries sustained by employees while they are on the job. This type of insurance is designed to protect both the employer and the employee. For the employee, it ensures that they receive benefits for medical care and income replacement if they are unable to work due to a work-related injury or illness. For the employer, it helps mitigate the risk of lawsuits related to workplace injuries, as employees typically relinquish their right to sue in exchange for receiving these benefits.

The coverage typically includes medical expenses for treatment of injuries, reimbursement for lost wages during recovery, and sometimes even benefits for vocational rehabilitation if the employee cannot return to their previous job. This foundational goal of workers' compensation is critical in promoting workplace safety, supporting employee recovery, and ensuring financial security during times when individuals may be unable to work due to health issues related to their employment.