Workers comp insurance
As a business owner with employees, an important insurance to have is workers’ compensation insurance. In many states, this type of insurance is legally required for conducting business. Even in states without the requirements, it is often a good idea to have. Before you start discussing your options with your insurance agent, it is beneficial to know the main details about this type of insurance to help you make an educated decision.
What is workers compensation insurance?
Workers’ compensation protects your employees from any illnesses or injuries that occur on-the-job. The insurance provides payment to the injured employee for time lost as well as medical expenses. It protects you as the owner from any lawsuits that might occur in connection with the accident or illness as well.
If you are found negligent or you purposely create an unsafe working environment, you might still be vulnerable to lawsuits even with adequate coverage. However, as long as you meet OSHA requirements, then your workers’ comp policy should protect you against liability for the injuries or illnesses that happen to your employees. Your individual policy will detail the instances under which you might still be vulnerable.
What does workers compensation cover?
This type of insurance covers any on-the-job injury or illness. This includes when your employees are on other premises for the job, such as when they visit clients or drive for business purposes. Common instances covered by this insurance include:
- Trips and falls
- Equipment or machinery
- Overexertion, sprains and strains
- Repetitive motion injuries (i.e. carpal tunnel syndrome or back pain)
- Sick building syndrome
- Mold exposure
To be eligible for workers’ compensation insurance coverage, the illness or injury must have a direct link to the employee’s job. The same injury or illness might not have the same coverage, since the situation matters. For example, someone in a high-stress job, such as a first responder, might suffer a heart attack due to his or her job. In this case, the insurance might cover their medical expenses. However, someone with preexisting cardiovascular disease who suffers from a heart attack at work not related to their work stress would not have his or her medical treatment covered.
Employees injured or sick on the job are entitled to medical payment and income loss. They might also be eligible for temporary and permanent disability benefits through this insurance. In the case of death, their beneficiaries also receive death benefits from this insurance.
Do I need workers’ compensation insurance?
The simple answer is that if you have employees, you need this type of insurance. Sole proprietors or partnerships whose only employees are owners in the business might not need this type of insurance, although you could decide to cover yourself, depending on your state. Contractors, subcontractors and other non-employee individuals working for your business might also need to be covered, depending on your state and industry.
The rules and regulations differ from state to state, so you should review your state’s guidelines before making any decisions. In most states, it is a legal requirement to conduct business. You also need to ensure that your policy adheres to the state requirements. For example, in some states, employees have the right to choose their own doctor for the medical treatment. However, other states stipulate that employers can decide the doctor. There are also requirements on how to handle disputes. Some states require that you purchase your policy through state-operated funds, but most states allow you to get your policy from your typical insurer. Some states have an option for both.
What do I need in a policy?
The first steps to take prior to deciding what type of policy to get is to see the regulations of your state. Then, you know what to ensure your policy includes n your coverage. It also will inform you whether you have to go through the state or can use a private insurance company. You can always discuss your needs with your insurance agent. They should be able to answer some questions or direct you to the right place to answer your questions.
Then, you need to determine what level of coverage you need. There are two parts to workers’ compensation: employers liability and statutory workers compensation coverage. Your state will most likely dictate the necessary benefits for your employees in case of injury or illness. It is beneficial to determine what gaps are in your general liability, umbrella and/or business owners policy coverage.
It is a good idea to assess your company’s risk factors prior to looking for an insurance policy to ensure you get adequate coverage. If you have locations in multiple states and/or physically do business across state lines, you will need to ensure that you have the right coverage for all states in which you conduct business.
Can I get cheap workers’ compensation insurance?
Although workers’ compensation insurance is more heavily regulated in most states than other policies, it remains possible to cut your costs so that you do not have to overextend your budget to get the coverage you need. Inquire into potential credits from your state to help cut costs. For example, some states offer credits in workplaces that are drug- and alcohol-free or a credit for having a small-deductible. Your assigned risk plan might also determine the cost of your policy, so it is beneficial to ensure you have the right designation. Some professional and trade organizations also offer sponsored programs to help cut costs. Your insurance agent might also have ideas on ways in which to cut the cost of your policy without damaging your ability to remain compliant with state laws and regulations.
It is essential that you purchase a workers’ compensation policy for your business if you have any employees that are not owners. This type of insurance is almost never included in any sort of packages for business, so you will always need to purchase it as a separate policy. Be sure to discuss the options with your insurance agent to find the right coverage for your business so that you and your employees are protected in case of an accident or another unforeseen health issue.