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Seeking Workers' Compensation From an Insolvent Employer

Posted on in Workers' Compensation

insolvent employer, work injury claim, Crystal Lake Workers' Compensation LawyerMost employees who are covered under Illinois workers' compensation law expect to receive workers' compensation benefits for injuries or diseases that result from the work they do, or are in the course of their employment. This expectation can be shattered when an employee realizes that his or her injury came at a time when the employer is experiencing financial troubles and is about to go out of business. Fortunately, the employee is not completely out of luck even if the employer is not financially able to meet the costs of the employee's injuries.

Generally, all employers who have a duty to carry workers' compensation insurance do so using third party insurance companies. Employers pay premiums to the insurance company to ensure the employees are covered, and the employer is not allowed to pass this cost on to the employee. The insurance companies provide coverage for employers and meet the financial obligation of paying out benefits when a claim is made and substantiated. If an employer experiences financial troubles and files for bankruptcy or dissolves the business, the insurance company is still required to pay out a valid workers' compensation claim for an employee of that business.

Even if the insurance company that provided the employer's workers' compensation insurance is going through its own financial troubles, the employee still has a right to receive workers' compensation benefits. The employee's right is guaranteed through statutorily created non-profit organizations such as the Illinois Insurance Guaranty Fund. The purpose of these organizations is to guarantee benefit payments to policyholders of some insurance companies that go out of business. While there are caps on the amount an injured person may receive from the Insurance Guaranty Fund when making a claim on other policies, there are no such caps for workers' compensation claims.

In some cases, an insurance company may not be covered by the Illinois Insurance Guaranty Fund. If a non-covered insurance company becomes insolvent, but the employer is still in business, then the injured employee can seek compensation directly from the employer. This kind of lawsuit would differ from a typical workers' compensation claim, and in some cases the employee may receive an award that would be larger than the benefits he or she would have received through insurance.

Contacting an Attorney Can Help Your Claim 

If either the employer or the insurance company is going out of business or is filing for bankruptcy, getting benefits or compensation may take a much longer time for an injured employee. Therefore, it is a good idea to get started with the claim early, and using an experienced workers' compensation attorney. If you an injured employee in this situation, contact the experienced Crystal Lake workers' compensation attorneys at our firm for a consultation on your case.

Sources:

http://iigf.ncigf.org/faq#n179

http://www.iwcc.il.gov/insurance.htm#bi

Illinois State Bar Association State Bar of Wisconsin Crystal Lake Chamber of Commerce Illinois Trial Lawyers Association McHenry County Bar Association
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