Why do many employers elect to purchase workers compensation insurance even if not required?

Why do many employers elect to purchase workers compensation insurance even if not required?

• A. It promotes "good-will" and a paternalistic attitude toward employees.
• B. It relinquishes strict standards set by the state and state insurance department.
• C. It is a competitive technique to attract and retain various key employees.
• D. The alternative is liability exposure that may not be covered under other liability insurance.

Answer: (D)

Employers buy workers compensation to control the risk of workplace injuries by ensuring that injuries are covered through a statutory system with guaranteed medical care and wage replacement, while usually shielding the employer from most lawsuits. Even if not required by law, this coverage is chosen to avoid liability exposure that might not be fully covered by other liability insurance. General or employer’s liability policies can exclude or limit coverage for employee injuries, or leave gaps that could lead to large, unpredictable costs. So, opting for workers compensation provides predictable, comprehensive protection for employees and reduces the chance of uninsured liability for the employer. The other options miss the financial risk-management aspect—goodwill or paternalism, relaxing state standards, or using it as a recruiting tactic don’t address the core reason for limiting exposure to injury claims.

Employers buy workers compensation to control the risk of workplace injuries by ensuring that injuries are covered through a statutory system with guaranteed medical care and wage replacement, while usually shielding the employer from most lawsuits. Even if not required by law, this coverage is chosen to avoid liability exposure that might not be fully covered by other liability insurance. General or employer’s liability policies can exclude or limit coverage for employee injuries, or leave gaps that could lead to large, unpredictable costs. So, opting for workers compensation provides predictable, comprehensive protection for employees and reduces the chance of uninsured liability for the employer. The other options miss the financial risk-management aspect—goodwill or paternalism, relaxing state standards, or using it as a recruiting tactic don’t address the core reason for limiting exposure to injury claims.