Workers’ comp vs. disability

Workers’ compensation and disability insurance protect you from injuries incurred on the job. However, there are critical differences between the two.

Here are these policies’ key similarities and differences so you know the best options.

What is workers’ comp?

Workers’ comp is insurance offered by your employer. When you become sick or injured while performing work-related activities, this insurance covers your medical expenses and part of your lost wages.

Who has to have it?

Most businesses have to have workers’ comp. However, each state has its laws. For example, in California, businesses more extensive than a handful of employees must have workers’ comp. If the company you work for does not have it, they face fines.

Who does it cover?

Workers’ comp covers those who work for the insured company. Therefore, if you are an employee, you are likely insured. Of course, there are several exceptions, especially for small businesses. Check to see if your employer covers you.

What are disability insurance policies?

Disability insurance pays you part of your typical income should an illness or injury prevent working. The big difference is disability applies to accidents and diseases you incur when you are not working too.

Can you purchase disability policies?

Unlike workers’ comp, you can purchase private disability policies to cover a more significant percentage of your lost income if you can no longer work. These are also popular because when you leave one employer, your policy stays with you when you find another.

Workers’ comp and disability are very different things. Workers’ comp covers work-related injuries, while disability can extend to illnesses or accidents outside the workplace. However, both are integral to your financial plan, and you must consider both when considering contingency options.