What Is Workers' Comp Indemnity?

An indemnity protects the insured person or entity against damage, loss or hurt. In the case of workers' compensation insurance, the insured is the employee. Most states, except Texas, require employers to carry workers' compensation insurance, a form of no-fault insurance for employees. The insurance offers medical coverage, lost-wage support, permanent disability benefits and vocational rehabilitation to employees and death benefits for family members.

Workers' compensation professionals categorize claims into two classes: indemnity and medical-only. An indemnity claim occurs when an employee becomes injured on the job and cannot return to work until he heals or his injury becomes permanent and stable. He receives medical treatment and wage support when he cannot return to work.

An employee injured on the job receives medical treatment for the injury. A medical-only claim applies when the employee immediately returns to work after the injury. An employee must be off for eight consecutive days before he can receive wage support, so even if he misses a few days from work, his claim is considered medical-only.

Each state sets the limits on the amount of money you can receive for a work-related lost-time injury. In Arizona, workers' compensation covers 66.67 percent of an employee's average monthly wage, not to exceed the state maximum, $4,062 as of Dec. 31, 2012, set by the legislature. The employee must be off work at least eight days or more to qualify for lost-time wage support.

A claims adjuster has 21 days after the notice of an employee's injury to accept or reject the claim under Arizona law. When the adjuster accepts an indemnity claim, the employee does not receive compensation for the first seven days after the injury if he is off from work fewer than 14 days. After 14 days away from work, the employee qualifies for lost wage support for the entire period until he can return to work.

When a worker becomes permanently disabled because of an on-the-job injury, the benefits he receives might include a lifetime award or settlement amount depending on the nature of the injury. Some injured employees might qualify for training or schooling to get another job if their injury keeps them from performing the job they had. When an employee loses his life because of a work-related injury, his family receives death benefits, including a burial allowance and a percentage of the employee's monthly wages not to exceed the state's maximum allowed.