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Ask The Expert: What are the Basics of Workers’ Compensation Coverage?

Updated: Jul 27, 2022

Workers' compensation laws were developed in the United States in the early 1900s. These rules gave workers no-fault access to treatment and compensation for work-related injuries and occupational diseases arising out of the course and scope of their employment. For the most part, these laws created rights for injured workers and made the settlement of workplace injuries an administrative matter rather than a civil matter.

Statutes covering workers’ compensation vary from jurisdiction to jurisdiction, but employers gain protection of no-fault compensation. States define which size or types of employers may “opt out” of the system and forego the purchase of workers’ compensation coverage. However, even those who forego coverage can be liable in the event of an injury or accident. When an eligible employer decides to opt out of coverage, they are actually opting in to exposing themselves and their other workers to litigation in the event of a serious or even not-so-serious workplace injury or illness.

It is true that most church work is non-hazardous and injuries similar to industrial ones that spawned the system generally don’t happen. However, people can fall off ladders or down the stairs or they could slip and fall. They sometimes get in automobile accidents or hurt their backs lifting something they thought they could lift. Accidents are sometimes completely or partially caused by the inadvertent actions of co-workers. These claims can expose the church and its employees to lawsuits if the injured party seeks compensation in the absence of workers’ compensation coverage and in the absence or insufficiency of disability or other applicable coverages.

So, before you opt out or continue to opt out of workers’ compensation coverage, ask yourselves these questions:

  • Do I want to risk significant cost to the church resulting from an uncompensated injury?

  • Do I want to expose my employees to the cost of either providing their own medical care and income or suing the church and its employees to recover damages?

  • Do I want to expose my employees to defending themselves in a lawsuit brought by a coworker, due to an accident for which they are allegedly responsible?

  • Is there a master workers’ compensation policy at the conference level that I can use to pay a premium that doesn’t include the minimum cost of issuing an insurance policy?

When you are covered by UMIP, we will be there when you need us. Churches have unique needs. As a part of the denomination, we understand the unique needs of United Methodist churches and their operations, which is reflected in our coverage options. Your ministry deserves outstanding insurance and UMIP works for you each day to help protect your church’s people, property, and finances.

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This content has been prepared by United Methodist Insurance Company (UMI) for informational purposes only. No article or document may accurately contemplate all possible scenarios or church resources. As such, this information is meant to foster discussion by the individual church and its members to develop a plan tailored to its own circumstances. UMI is providing this information with no warranties or guarantees of any kind and it should not be viewed as legal, financial, or other professional advice. All liability is expressly disclaimed. Any claim examples described herein are general in nature, may or may not be based on actual claims, and are for informational purposes only. Any coverage available for a claim is determined from the facts and circumstances of the claim as well as the terms and conditions of any applicable policy, including any exclusions or deductibles. In the event of a conflict with the content herein, the terms and conditions of any issued policy will control. Individual coverage may vary and may not be available in all states.

The commercial insurance coverages for United Methodist Insurance are sold and serviced directly or indirectly by Sovereign Insurance Agency (CA Lic. No. 0B01380) ("Sovereign") and underwritten by various available insurance markets. Sovereign pays United Methodist Insurance a royalty for the use of its intellectual property.


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