What You Need to Know About Occupational Accident Insurance
An occupational accident insurance plan (OAI) can make a major difference for an independent contractor when they get hurt on the job. If you're not sure about choosing an occupational accident insurance policy, though, it can be helpful to learn a bit about them before you purchase a plan. Here are four things you should know before you commit to one.
Roughly Equivalent to Workers' Compensation Insurance
Employees of businesses usually are covered by workers' compensation. In a rough sense, an occupational accident insurance plan is meant to serve the same purpose for someone who doesn't legally have an employer.
A plan usually covers the basic things you'd worry about following an on-the-job injury. For example, you'd definitely want to see money to cover medical bills. They're also usually is a death benefit. Similarly, the policy may cover some or all of your lost wages.
Who Uses Occupational Accident Insurance?
These sorts of policies are most common in industries with many independent operators. Unsurprisingly, a lot of truck drivers opt for some form of occupational accident insurance policy in case they're involved in a wreck. Many home health professionals and traveling nurses also go this route. You may also see it with tech contractors, especially folks who tackle more hazardous work, such as installing cabling in ceilings.
Broadly speaking, anyone who works as an independent contractor can purchase an occupational accident insurance plan. However, many types of contractors, such as plumbers and electricians, form companies and use the workers' compensation to cover themselves and a handful of employees.
Notably, this sort of insurance only covers what happens to the contractor. It doesn't cover anyone else, such as victims of accidents or passengers.
Burden of Proof
One major difference between OAI and workers' compensation is that the burden of proof rests with the employer. Also, employees can seek punitive damages. This is why almost no one uses it to cover employees at a regular business, even though it is possible to do so. An occupational accident insurance plan usually works best when the employer is the employee.
Insurance as a business model is underpinned by pooling risk among similar people who pay premiums. Most OAI insurers only offer a plan once a pool of similar-risk individuals is available. However, this involves pooling a small number of folks, such as 10 to 50, and can typically be done quickly. The size of the risk pool usually depends on the dangers within the industry and the ability of contractors to pay.