What Is Occupational Accident Insurance? & Its Coverage?

Thang Truong
Thang Truong
Updated on:

Occupational Accident Insurance (OAI) is a popular, lower-cost alternative to workers’ compensation coverage in the trucking and other industries.

I’ll explain everything you need to know to figure out whether it makes sense for you to purchase this coverage to protect your drivers should they be injured on the job.

What is occupational accident insurance?

Occupational accident insurance covers work-related injuries and provides death benefits for employees and independent contractors not covered by workers’ compensation coverage. OAI is a type of accident insurance similar to workers’ comp. It’s less expensive and it doesn’t provide as complete protection as workers comp. OAI is often used as a substitute for workers’ comp when the coverage isn’t required by state laws.

If you are an independent contractors, you know that you do not have workers comp insurance from the company that you work for. However, you can still get workers comp coverage for yourself. Learn more at the best workers comp insurance for independent contractors.

Why are some workers not covered by workers’ comp? 

Some states allow certain employers to opt-out of their state’s workers’ compensation program or not get coverage for defined parts of their workforces. Other states, like Texas, don’t require employers to get and provide the coverage at all. 

However, employers may still have a legal requirement or financial need to cover their employees in the event of a work-related injury or death. Or they may want to do the right thing for people who work for them, so they get the coverage. OAI is used as a substitute for workers’ comp in these situations.

What does occupational accident insurance cover?

OAI coverage typically pays for three different things:

  1. Medical expenses resulting from on-the-job accidents.
  2. Accidental death and dismemberment benefits. (These are typically limited to a defined multiple of the trucker’s annual earnings.)
  3. And if additional coverage is purchased, which is often the case, disability benefits, which includes lost wages.

Each of these things comes with an annual per-accident deductible that the business owner is responsible for paying and a maximum payable amount for each incident. Policies also include a yearly overall payment cap.

What’s the difference between occupational accident insurance and workers’ comp coverage?

Let’s start with the most basic aspect of this. OAI is not an option in some states because they don’t allow businesses to meet or replace their worker’s compensation obligations through OAI.

In states where businesses are allowed to purchase OAI, it usually costs half of what workers’ compensation coverage does. OAI covers lost wages, medical expenses, and a death benefit, all up to policy limits. However, it doesn’t pay for job retraining if a trucker is no longer able to drive a truck or move goods after an injury. Also, disability benefits, included with workers’ comp coverage, are an optional add-on with OAI.

Most businesses opt for workers’ compensation over OAI because it’s more comprehensive and provides a higher level of protection to the operation and its employees. It’s also regulated by the government and not controlled by insurance companies.

Workers’ comp insurance pays lost wages, within limits, all medical expenses related to a workplace injury or illness, short and long-term disability, along with funeral costs and death benefits. It also pays to retrain workers if they cannot work as truckers because of an injury.

Another advantage of workers’ compensation is that for a claim to be paid out, proving that an injury or illness resulted from work-related reasons lies with the worker, not the employer. This reduces the burden on small business owners.

Workers’ compensation laws prevent injured workers from suing their employers for pain and suffering or punitive damages if they’re injured or become ill for work reasons and are covered by workers’ comp. This part of the law makes it less likely businesses will face employee injury lawsuits if they carry workers’ comp insurance. In the rare cases when employees sue, worker’s compensation coverage pays legal fees. A significant negative of OAI is that it doesn’t reduce the risk of lawsuits by employees from work-related injuries as much as workers’ comp does.

There are typically no time limits for making OAI claims, which there are for workers’ comp. That means an injured or ill person can sue for damages at any time, which isn’t the case for workers’ comp. Beyond this, employers have the burden of proving that an employee’s injury is not work-related and shouldn’t be covered by the OAI insurance. This type of discovery can be costly, requiring a significant outlay of money to investigate the employee’s claim.

What makes occupational accident injury insurance attractive to trucking businesses?

In addition to its lower premium cost, OAI is far more flexible than workers’ compensation insurance. Employers can add coverages to their base OAI policy, including:

  • Temporary disability payments if employees can’t return to work for a limited time period
  • Permanent disability payments if they can’t work for a long time 
  • Survivors benefit, for immediate relatives of someone who dies on the job
  • Accidental death benefit, which pays funeral and other expenses of someone who passes away due to work-related reasons
  • Accidental dismemberment which pays if someone loses an arm, leg, or other appendage because of a work incident
  • Accident medical expenses, including doctor and hospital costs
  • Non-occupational accident benefit
  • Hernia and other benefits related to specific health conditions
  • Chiropractic benefits to help relieve work-related strains
  • Passenger accident benefits for truck passengers who are injured in an accident.

Many of these policy add ons are expensive, but they help make OAI protection more similar to workers’ comp coverage.

In addition, OAI policies give you the freedom to select:

  • The liability limit per accident
  • The deductible amount per accident
  • The disability coverage level
  • The death benefit level.

Adjusting these things will allow you to provide adequate accident injury protection at a cost you can afford. Learn more at the best occupational accident insurance for truckers.

Trucking companies are among the big purchasers of occupational accident insurance. It allows them to provide accidental injury benefits to owner-operators who are not employees.

Truck drivers are at a greater risk of work-related accidents and injuries than workers in most other industries. However, non-employee drivers don’t have to be covered by workers’ compensation insurance in most states.

OAI is a good option for trucking companies. It helps attract independent drivers who would otherwise be concerned about working for them because they have no protection if they’re in an accident and become injured while working for the firm. While it’s not full workers’ comp, it is a reasonable form of accidental injury protection.

Added benefit of OAI: OAI also provides a limited level of protection to employers if an independent driver who becomes injured claims to be an employee who is eligible for workers’ compensation benefits. Plus, having the coverage reduces the possibility an independent trucker will sue you over accident-related injuries. 

How much does occupational accident insurance for truckers cost?

The cost of OAI will vary, based on several factors, including the insurance carrier, type of trucking and goods hauled, the number of truckers, type and age of vehicles and safety equipment, driving records, and your accident claims history. Your policy deductible, amount of coverage, and policy limits will also impact premium costs.

The biggest factors insurers will consider are the risks your policy will cover and how much it will pay out for accident-related expenses. The greater the risks and higher the payouts, the more your premium will cost.

Occupational accident policy premiums for truckers with limits between $500,000 and $1 million can range between $60 and $160 per month per operator.

How to get the cheap occupational accident insurance for truckers?

Because of the complexity associated with OAI, you owe it to yourself to get multiple quotes from carriers to find the best coverage for your truckers at a price you can afford. Working with a broker or an agency such as CoverWallet or CommercialInsurance.net is another good way to compare several quotes more easily while having expert advice.

Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at realtor.com, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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