Workers’ Compensation Catastrophe Cover

What Does Workers’ Compensation Catastrophe Cover Mean?

Workers’ compensation catastrophe cover is a form of reinsurance that an insurance company obtains to protect itself against significant losses resulting from a catastrophe or a series of events that cause injuries to multiple workers. This coverage helps limit the financial impact on the insurer in the event of multiple claims under a workers’ compensation policy, which typically covers medical expenses and lost wages incurred due to job-related accidents.

Insuranceopedia Explains Workers’ Compensation Catastrophe Cover

Workers’ compensation catastrophe cover protects insurance companies against the financial impact of a disaster or event that results in multiple claims. In response to the events of September 11, 2001, the insurance industry reevaluated and enhanced this type of coverage to mitigate its impact in case of large-scale incidents.

Alternatively, some employers choose to self-insure rather than purchasing workers’ compensation insurance for their employees. In such cases, they may still purchase catastrophe coverage to help cover claims that exceed the funds they have set aside for this purpose.