Workers' Comp and Occupational Accident Insurance

What is the difference and which is right for your business?

The gig economy’s rise in recent years is due in large part to the benefits it offers workers. These benefits include flexibility, new opportunities, and in some cases, higher earnings.

One of the gig economy’s main drawbacks is the lack of benefits traditional employees receive from their employers. This can include health insurance, paid time off, and workers’ compensation. But that doesn’t leave gig workers without alternative options.

Workplace safety is a priority for everyone. Businesses want workers to be safe on the job and workers want to feel safe on the job. 

Workers' compensation and occupational accident insurance are two options available to protect workers and businesses. While they may seem similar at first glance, they serve different purposes and come with distinct advantages. 

Let’s dive into the differences and explore how occupational accident insurance benefits gig workers and businesses alike.

Workers' Compensation

Workers' compensation is a state-required insurance program. It helps employees who get sick or hurt while working. Workers’ comp covers medical expenses, lost wages, and rehabilitation costs. In exchange for this protection, employees typically waive their right to sue their employer for workplace injuries.

Key features of workers' comp include:

• State-regulated: Each state has its own laws, regulations, and coverage requirements.

• Comprehensive coverage: Includes medical expenses, disability benefits, and wage replacement.

• Legal obligation: Most businesses with employees must provide workers’ compensation coverage.

What is Occupational Accident Insurance?

Occupational accident insurance is an alternative form of coverage often used by independent contractors, freelancers, and gig workers. Unlike workers' comp, which is mandatory in many states, occupational accident insurance is generally optional, flexible, and affordable. OAI typically covers work-related injuries, medical expenses, lost wages, and death benefits.

Key features of occupational accident insurance include:

• Flexibility: Independent contractors and businesses use OAI to obtain coverage without being subject to workers' comp regulations.

• Lower premiums: Occupational accident insurance offers some protection at a more affordable rate.

• Customizable: Workers and businesses can choose coverage levels that fit their specific needs. This makes OAI more adaptable than workers’ compensation.

Workers' Comp vs. Occupational Accident Insurance

The Benefits of Occupational Accident Insurance for Independent Contractors

For independent contractors, OAI offers a valuable layer of protection not provided under workers' compensation. Some benefits for workers include:

• Affordable Protection: Gig workers are typically not eligible for workers' comp. Occupational accident insurance provides an affordable way to cover medical costs and lost wages resulting from work-related injuries.

• Customizable Plans: Workers can pick the coverage level that fits their needs. This helps them balance cost and protection.

• Peace of Mind: Insurance coverage provides independent contractors with financial security and reduces the risk of unexpected expenses.

The Benefits of Occupational Accident Insurance for Businesses

Businesses that engage independent contractors or gig workers can also benefit from providing occupational accident insurance:

• Lower Costs: Occupational accident insurance often comes at a lower price point than workers' compensation. This can save businesses money while still offering independent contractors essential protection.

• Avoid Legal Complications: By offering occupational accident insurance, businesses can reduce their risk of legal disputes.

• Worker Retention: Offering occupational accident insurance can help attract and retain top talent in the competitive gig economy.

Choosing the Right Coverage for Workers

Workers' compensation and occupational accident insurance both protect workers in the event of a workplace injury. However, one might be better suited for your business than the other. 

For businesses employing traditional employees, workers' comp is often a legal requirement. However, OAI is an affordable and flexible option for companies that work with independent contractors and gig workers.

For gig workers, occupational accident insurance is a crucial benefit that offers peace of mind and financial security. Understanding the differences between these two types of coverage helps workers and businesses. This knowledge allows them to make better choices for their future.

Did you know that every worker on the shiftNOW platform has OAI coverage? Our OAI coverage protects every Shifter when they pick up a shift through the app.

Create a shiftNOW account to learn more!