In most states, workers’ compensation insurance is a legal requirement for businesses that have employees. While there are a few exceptions, very few, to the rule of the law, the risks of not carrying workers’ compensation insurance make it well worth considering even if you are not required to carry it. These are just a few risks businesses face if you do not carry workers’ compensation coverage for your employees.
Costly Litigation
It’s not just landmark settlements that matter when it comes to workers’ compensation litigation. As a business you have a responsibility to your employees to provide a safe working environment. If they are injured or killed in the course of their work, then your business can be held legally responsible.
Workers’ compensation shields your business from most work-related lawsuits, and the associated costs, as well as settlements that may be awarded. Without that insurance coverage, your business is on the hook for everything and defense costs alone can add up quickly – especially if the case goes to trial.
According to theSmall Business Administration, the average costs for civil cases runs from $50,000 to $100,000 and that doesn’t include appeals or judgments. That’s just the cost of the initial trial alone.
Jury awards can be quite costly to the tune of millions of dollars the average small business simply doesn’t have to spare. There is no limit to financial liability for employers who fail to provide worker’s compensation to their employees. This means that in addition to medical expenses and lost wages, you’re on the hook for “pain and suffering” awards as well.
Fees and Penalties
Fees and penalties vary greatly from one state to the next. Some businesses mistakenly believe that the money they save in workers’ compensation premiums are worth the risks of not paying them. However, in addition to the risks that occur when accidents and injuries happen in the workplace, and your resulting liability, there are also big risks businesses face when it comes to fines, fees, and penalties that can be levied against them.
You must research the specific laws in your state to find out what those penalties may be, but most of them are not at all inexpensive. Many of them exceed the cost of the insurance coverage to being with. It’s better to simply bite the bullet and purchase the insurance.
Bad Press
In the event that your employees are injured in the course of their work and it’s discovered that you do not carry workers’ compensation insurance, there are
public relations issues your business is going to have to endure as a result too. While they don’t have specific dollar amounts attached to them, you should rest assured that the court of public opinion does have a direct bearing on your bottom line.
Businesses need workers compensation insurance if you have employees. It really is as simple as that. These are just a few of the top reasons your business needs this invaluable coverage.
