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Commonly called “workers’ comp”, worker’s compensation insurance is essential, and often-legally required protection for business owners with employees. It functions as health insurance, disability insurance, and life insurance all rolled into one by paying for medical expenses, covering lost income, and even supporting the dependents of employees who are hurt or killed due to workplace accidents.
In addition to saving you money in expenses you don’t have to pay for injured workers, it can also protect your business from being forced to shut down due to expensive damages claimed by injured employees, which may reach tens of millions of dollars in the case of serious long-term disability and medical treatment.
Workers comp insurance protects you from huge financial liabilities from claims by injured employees, and also provides a safety net for employees. Having workers comp shows your employees that you are serious about being there for them.
Workers’ compensation insurance for small business is a key part of your company’s growth for a number of reasons. Here are a few of them:
Workers’ compensation coverage protects both employers and employees. Let’s say human error, equipment malfunction, or just plain bad luck leads to an employee breaking his leg in two places while he’s working. He’s going to need x-rays, possibly surgery, physical therapy, and at least a few months of recovery until he can do his job again. Small business workers’ comp will cover all those expenses so that his family doesn’t have to drain their savings.
Even if you are a sole proprietor, you may want to consider getting workers’ comp insurance for self-employed professionals. This kind of policy can cover you in cases that aren’t covered by your personal policy but may overlap in a number of ways. In some cases, your personal health insurance may specifically exclude workplace accidents which the insurer decides should be covered by a workers’ comp policy, so having workers’ comp is essential.
A trusting relationship between employers and employees can make a significant difference in productivity levels. When employees know that you have their back in both good times and bad, they are more invested in their work and focused on the job at hand. Proving you take care of your employees will help you attract and retain the best workers in your area.
Most states require employers to provide some type of small business workers’ compensation insurance for their employees. In some states, employees must be covered by state-operated funds called monopoly state funds. However, coverage isn’t mandatory for every industry and the workers’ compensation requirements for small businesses can even change from county to county, so be sure to do careful research into individual workers’ comp employer obligations.
It’s important to note that for contractors, workers comp may be a requirement in order to bid on contracts. Due to a legal requirement around contractors’ workers comp insurance, some clients will require you to show that you carry workers comp for contractors, even if you’re a sole proprietor.
Of course, this varies depending on the injury, but a comprehensive workers’ comp insurance policy will cover everything from diagnostics, to treatment, to rehabilitation. So, in the broken leg example we discussed earlier, the employee would be reimbursed for x-rays, surgery, and physical therapy during the recovery period.
For people in very physical jobs, even a small injury can make it difficult, or impossible, to work safely. This coverage enables an injured employee to take off the time they need to recover without worrying about paying the bills. While this coverage is often only a portion of their full salary, in many cases, it is far better than having no income coming in.
Of course, some injuries can prevent employees from ever returning to the same job. In this situation, workers’ compensation insurance will pay for the employee to learn new skills and enter a new field.
You’ll notice a wide variety in the coverage of permanent injuries and disability between different policies. This depends on the insurance company as well as the requirements of each individual state and county. However, in most cases, it will take care of an employee who has been injured seriously enough that they can no longer work, in any field.
This is the section of the insurance policy that is paid to the family of an employee killed on the job. It can include anything from funeral costs to long-term income replacement.
Most companies in dangerous industries have clear safety policies, sometimes over and above state requirements. Workers’ comp often will not cover employees who are hurt while violating these policies and regulation. They’re also not covered for injuries sustained off the job. Some states even demand drug and alcohol testing and don’t cover employees who were using drugs or alcohol when injured.
Incidents involving drugs or alcohol
Injuries not connected to work
This is a brief summary of your policy and does not supersede the policy documents. If you want full details, please call us.
The cost of workers compensation insurance varies based on a wide variety of factors, and is as individual as the business owners themselves. Whether workers’ compensation insurance costs the employer almost nothing or a large percentage of the operating budget depends largely on the industry and its associated risk levels. However, it also varies widely from state to state due to the differing requirements of each state. To find out exactly how much workers’ compensation insurance will cost, you’ll have to get a quote that is tailored to your industry, location, and specific needs.