Insurance may be contributory or noncontributory.  It is on the contributory plan when the insured workers contribute something toward the premiums that provide the funds for eventual payment.  It is noncontributory when the funds are provided either by the employers or by the state without any payments from the insured.

Insurance may be (a) in private companies, carrying on the business for profit; or (b) in mutual companies of workingmen, or of employers insuring themselves against the cost of compensation in case of accident to their employees; or (c) in a state bureau, or fund, organized and conducted by government.

Sec. 5. #Historical roots of accident insurance#.  The different kinds of social insurance had different origins, some knowledge of which is necessary to an understanding of the present situation.  These origins still affect the nature of social insurance to-day, and have prevented the development of a truly unified and logical system in accord with present conceptions of needs and of justice.

Accident insurance had its beginnings in the liability of employers for accidents that happened as a result of the employer’s negligence, a principle found to some degree in all countries.  Thus the earlier payments to workers in cases of accidents were not insurance indemnity but merely damages collected in court for the fault of the employer.  In Great Britain and the United States, indeed, by judicial interpretation the law grew more strict as against the claims of the workers, until about 1880 in Great Britain and 1910 in the United States.  To collect damages it was not enough for the workman to prove the employer’s negligence, for collection was made more difficult by (1) the doctrine of contributory negligence, (2) the doctrine of the assumption of risk, and (3) the fellow-servant doctrine.

By the doctrine of contributory negligence, the workman’s claim could be defeated by showing that he had by his carelessness contributed to the accident even when the employer had been negligent.  By the doctrine of assumption of risk the workman was presumed, in entering upon employment, to have taken upon himself the risks usually incident to the employment, including the chance of imperfections in the machinery, of which he might by some care have known.  By the fellow-servant doctrine the employer was freed from responsibility for accidents due to the negligence of other employees, “fellow servants,” even when it was impossible for him to know their character and reputation as in the case of a large factory or of a great railroad.