According to Safe Work Australia, there were over 130,000 serious workers’ compensation claims in 2021.
That’s 10,000 more than in 2020!
What’s more, injuries or illnesses due to working conditions led to employees taking, on average, seven days off to recover.
Employees taking time off, increased insurance premiums, and fees related to employees’ claims, including legal fees, can significantly impact your operations and bottom line and seriously endanger your business.
That’s why being covered for workers’ compensation is so important.
But did you know employees and third parties interacting with your business can also lodge a personal injury (or personal accident) claim against you? And this wouldn’t fall under your workers’ compensation insurance. You’d need personal accident insurance to protect you against this type of claim.
Now, we know what you’re thinking; what’s the difference between workers’ compensation and personal accident insurance?
Keep reading as we explain everything in this comprehensive guide.
What defines a personal injury or a personal accident claim?
A personal injury claim is a legal demand for compensation made by an individual who has sustained harm, including physical injury or emotional trauma, due to another party’s negligence or intentional actions.
In your case, as a sole trader or business owner, it could be an employee, client, or supplier making a claim against you because they sustained an injury when interacting with your business due to your negligence.
The goal for a person lodging a personal injury claim is to obtain financial compensation to cover the damages related to the injury sustained. Compensation typically includes medical expenses, lost wages, and pain and suffering.
It’s important to understand that fault (or negligence) is key in personal injury claims. Therefore, to be able to make a claim, the person needs to prove that the accident was a result of negligence or intentional actions and that the employer or third party is liable.
What is a workers’ compensation claim?
A workers’ compensation claim is a legal demand for compensation made by an individual who has sustained harm, including physical injury and emotional trauma, but negligence wasn’t involved in the accident.
The idea behind workers’ compensation claims isn’t to prove that the employer or that a third party was at fault. Instead, workers’ compensation claims are about ensuring a safe workplace for all employees and supporting injured workers throughout their recovery.
Workers' compensation aims to provide financial and/or medical support to employees who sustained an injury or are experiencing illness due to their job.
Note that workers’ compensation is compulsory in Australia, regardless of your state or territory. All businesses need to hold this form of insurance to protect their employees in the event of an accident.
What’s the difference between workers’ compensation and personal injury insurance?
Let’s take a concrete example so you can better understand the difference between workers’ compensation and personal accident insurance.
Let’s say you run a building company, and one of your employees is working on one of your construction sites. You haven’t had the time to provide them with proper safety equipment and training yet.
Now, let’s imagine that the employee falls from a ladder and suffers a serious head injury as a result.
In this case, your employee could file a personal injury lawsuit against you for being negligent and failing to provide a safe working environment.
The goal of the claim for your employee is to seek compensation for all medical expenses, lost wages, pain, and suffering incurred, along with any other damages resulting from the injury.
This type of claim would be separate from a workers’ compensation claim because negligence (or liability) is involved.
The key difference between workers’ compensation and personal injury claims is that personal injury claims are based on negligence or fault, while workers’ compensation claims aren’t.
Now let’s take another example where workers’ compensation is involved to make sure you’re fully aware of the difference between workers’ compensation and personal accident insurance.
Let’s use the same scenario and imagine you’ve trained the employee and provided safety equipment. They’re working on the same building site.
Unfortunately, they went down the ladder too quickly, slipped, and hurt their head.
Because, in that case, you provided safety equipment and proper training, you can’t be held liable.
This is where workers’ compensation comes into play.
What types of injuries are covered by workers’ compensation?
The type of injuries covered by workers’ compensation depends on strict assessment criteria. Injuries will only be covered if they were sustained on the job or while performing job-related activities. However, in some instances, injuries sustained while travelling to work or for work might be considered.
Usually, workers’ compensation covers both physical and psychological injuries. Note that according to a report from Safe Work Australia, 91% of workers’ compensation claims are related to physical injuries.
Some examples of injuries include the following:
- Broken bones
- Burns
- Cuts
- Heat or electricity-related injuries
- Physical pain due to repetitive stress put on the body
- Illnesses caused by exposure to bacteria or viruses
- Illnesses caused by exposure to chemicals or hazardous materials
- Mental health conditions caused by stress at work
When it comes to psychological injury claims, for someone to receive a lump sum compensation, the injury requires a 15% whole-person impairment minimum, while the threshold for physical injury claims is 10%.
Can I claim weekly payments or recoup medical expenses?
If one of your employees sustained an injury at your workplace and is losing earnings as a result, they might be entitled to weekly payments. As a general rule of thumb, once granted weekly payments, the individual will be entitled to receive them for up to 12 months from the date of their incapacity. Yet, as always, this will be assessed based on specific criteria, and there’s no one-size-fits-all answer when it comes to personal injury and workers’ compensation claims.
Medical expenses might also be covered depending on each individual case. However, keep in mind that most treatments require pre-approval. Therefore, seeking advice from a professional and contacting your insurer should be a priority.
Conclusion
We hope you’re now all clear on the difference between workers’ compensation and personal accident insurance.
Navigating the insurance field can be daunting, especially if it’s not your area of expertise.
Fortunately, it’s ours!
At upcover, we specialise in helping sole traders, small business owners, startups, and independent contractors protect themselves against various claims. We know how devastating the consequences of a claim, such as a personal injury claim, for instance, can be on your business and are here to help!
So, don’t hesitate to get in touch to discuss your needs and see how we can help. Alternatively, jump on our instant quote generator to get quotes on market-leading insurance in seconds.
And because we’re here to support you every step of the way, we also regularly publish articles sharing tips and detailed information about business and insurance-related topics on our blog.
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