Workers' Compensation Catastrophe Cover

Definition - What does Workers' Compensation Catastrophe Cover mean?

Workers' compensation catastrophe cover is reinsurance that an insurance company acquires to protect itself against losses arising from a catastrophe or chain of events that result in injuries to multiple workers. It helps limit the costs of the insurance company in case of multiple claims under the workers' compensation policy, which provides payment for medical expenses and lost wages incurred in a job-related accident.

Insuranceopedia explains Workers' Compensation Catastrophe Cover

Workers' compensation catastrophe cover protects the insurance company against a disaster or loss involving multiple claims. Following the events of Sept. 11, 2001, the insurance industry re-evaluated and improved this type of coverage in order to lessen its impact.

On the other hand, some employers self-insure instead of buying the workers' compensation insurance for employees. They may also purchase this catastrophe coverage to pay for claims that exceed their available funds.

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