What is the primary purpose of an insurance policy in the context of workers' compensation?

The primary purpose of an insurance policy in the context of workers' compensation is to provide a document that outlines coverage details. This policy delineates the specific risks covered, the benefits available to injured employees, and the terms under which claims can be made. By having a clearly defined set of coverage details, both employers and employees understand their rights and obligations. This clarity helps ensure that employees receive the necessary medical care and compensation for lost wages resulting from work-related injuries or illnesses.

While a workers' compensation insurance policy is indeed a legislative requirement for employers, this aspect is more about compliance than the core purpose of the policy itself, which is to provide financial protection. Employee grievance resolution pertains to how disputes over compensation or benefits may be handled, which is not the primary purpose of the insurance policy. Lastly, while workplace safety is an essential element of the broader workers' compensation system, the insurance policy primarily serves to manage financial risk and provide benefits after an injury occurs.