During the March GPGA Conference, my brother and I received endless questions on workers’ compensation. It is a topic that the attendees expressed concern and a topic that I feel is definitely relevant.
Today’s Workers’ Compensation Act started in the United States during the early 1900s. The state of Georgia adopted its Act in 1920 and like many other states, Georgia placed an exemption within the law for “farm labor.” Because of this exemption many farms rely on Farm Employees’ Medical Payments. Farm Employers’ Liability and Farm Employees Medical Payments Insurance is an endorsement that can be placed on your farm liability policy.
The first section is the employers’ liability and has its own insuring agreement that states that the coverage will respond when the insured is “legally obligated to pay as damages because of bodily injury to which the insurance applies.” The bodily injury has to be caused by an “occurrence” sustained by a “farm employee” and needs to arise out of and in the course of employment. Next the injured employee must have been working for the insured at an insured location used for “farming” purposes. The number one thing to remember with this coverage portion is that the farm employer has to be “legally liable” for coverage to apply.
The second section is Farm Employees’ Medical Payments. This insuring agreement states that the insurer will pay “all reasonable medical expenses to which the insurance applies” for injury to a farm employee who sustains injury caused by an accident. Again, the injury must arise out of and in the course of employment and an insured location used for “farming” purposes.
My point in listing the insuring agreement for both parts is to illustrate that the coverage becomes narrow and completely dependent on the definitions of “Farm Employee,” “Farming” and “Insured Location.” Farm Employers’ Liability and Farm Employees’ Medical Payment Insurance is a good endorsement and has its place as part of a farm package policy, but it is not a substitute for Workers’ Compensation.
Workers’ Compensation was the first “no fault” insurance and is exclusive remedy. The law contains an exclusive remedy provision that stipulates that the benefits prescribed in the act are the sole remedy against the employer for covered injuries sustained on the job. Thus the employer does not have to be “legally liable” for coverage to apply. Workers’ Compensation does not have a definition of duties and there are only two simple questions for coverage to apply: (1) was the worker on the job? (2) is he or she injured?
The Workers’ Compensation act for the state of Georgia exempts “farm labor,” but what about your employees that do not fall under the definition of farm employee? If part of your operation has a processing plant for your products, these employee are included under the law and not the exemption. Plant employees, forklift operators, truck drivers, etc. are all examples of duties that require Workers’ Compensation.
Outside of pure coverage forms you need to look at the economics of employee medical payments and workers’ compensation. Most medical payment policies are limited to a maximum payout of $5,000. Workers’ Compensation pays 100% of the medical cost plus a weekly indemnity while the injured employee is out of work.
As a final thought on workers’ compensation. It provides coverage regardless of fault. There is no need to prove liability; only prove that they were injured arising out of and in the course of their employment by the insured. Should an accident occur, would you feel better if a key employee is provided coverage for all medical expenses? Again, both Farm Employees’ Medical Payments and Workers’ Compensation have their place in a farm coverage plan. Only with a discussion and careful thought can we determine the best application of these coverages for your farm.
Special thanks to Mr. Tash J. Van Dora Attorney at Law and AgriTrust of Georgia Workers’ Compensation Insurance for Agribusiness for their contributions. Additional references came from the International Risk Management Institute, Inc. (IRMI).