Workers' Compensation Insurance
Benefits and exclusivity
Workers compensation is a no-fault statutory system: benefits are paid regardless of who caused the injury, and the exclusive remedy doctrine generally bars the employee from suing the employer. Benefits include medical care (usually unlimited), disability income (temporary total, temporary partial, permanent partial, permanent total), death benefits for dependents, and rehabilitation. Vermont generally requires coverage once an employer has even one employee, subject to narrow statutory exceptions.
Policy structure
The standard policy has three parts. Part One - Workers Compensation pays all benefits required by statute, with no dollar limit. Part Two - Employers Liability responds to tort suits that escape the exclusive remedy (for example, third-party actions or claims outside the workers comp act), written with limits such as $100,000/$500,000/$100,000. Part Three - Other States extends coverage to listed states. Premium is based on payroll per $100 of remuneration, classified by job duty, adjusted by an experience modification factor and premium audit.
Who counts
Sole proprietors and partners are generally excluded unless they elect coverage; corporate officers may be included or excluded by endorsement; independent contractors are typically excluded (and misclassification is a common audit issue). Coverage territory, extraterritorial provisions, and federal acts - FELA, Jones Act, Longshore and Harbor Workers' Compensation Act, and the Defense Base Act - may apply instead of state coverage.
Traps
Questions commonly confuse Part One (unlimited statutory benefits) with Part Two (limited tort liability) and forget that payroll, not revenue, drives premium.
Rule of thumb
Part One has no dollar limit; Part Two does. If the employee sues a third party, workers comp still pays, and the carrier may subrogate.