Definition of Voluntary Compensation
Voluntary compensation is an endorsement to a standard workers' compensation insurance policy that an employer has. It extends coverage that is like workers' compensation to employees that are not required to be covered by a particular state's workers' compensation laws and provisions.
In each state, there are certain groups of employees that are excluded from workers' compensation coverage. Examples of these are domestic workers, casual workers, real estate agents or brokers, non-commercial farm employees and others. In order to provide some kind of coverage to those employees who are excluded, an endorsement has to be issued to a workers' compensation policy. This endorsement is voluntary compensation. An important thing to remember about voluntary compensation is that it does not provide workers compensation coverage to excluded employees. It provides benefits that are the same as those provided by workers' compensation. The endorsement only applies to and covers employees of the insured, not volunteer workers. In addition, it should be remembered that an employer is not required to provide voluntary compensation. As implied by the name, it is voluntary on the part of an employer. However, voluntary compensation can protect both an employer and an employee in the event of a work-related injury or illness.