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Workers’ compensation provides a safety net for you and your employees after a workplace injury. It can help cover expenses for medical treatment, lost wages and other costs.
You’re required to purchase coverage in most states as soon as you hire your first employee.
The workers’ compensation system was created to ensure workers are taken care of if they are hurt on the job, while also protecting business owners from significant financial losses after an accident.
For example, if a heavy beam lands on a construction worker’s foot and causes a compound fracture, workers’ compensation can cover medical expenses and lost wages during the recovery. Without insurance, the employer could be responsible for all related costs, which could add up to tens of thousands of dollars.
Workers’ compensation is not just limited to high-risk jobs. Repetitive-motion injuries (i.e., carpal tunnel), slip-and-fall accidents and strains are more common than you might think at relatively safe desk jobs.
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There are several reasons why workers’ compensation is a good investment for your business:
Because of the essential nature of workers’ compensation coverage, it is legally required in most states for businesses with employees. There can be significant penalties for non-compliance, ranging from fines to felony criminal charges in the most extreme cases.
It’s essential to know the workers’ comp requirements in the states where you do business. For example, Colorado requires coverage as soon as you hire an employee. Workers’ comp in Texas is optional, but many businesses and government contractors will ask you to have coverage.
Workers’ compensation protects employees and business owners like you. Let’s say human error, equipment malfunction or just plain bad luck leads to an employee breaking his leg. He’s going to need X-rays, possibly surgery, physical therapy and several weeks of recovery until he can do his job again.
Workers’ comp insurance can help pay for all those expenses. Otherwise, the business owner would most likely be responsible for covering costs out of pocket.
Even if you are a sole proprietor, you may want to consider getting workers’ comp insurance business owners coverage. Your policy can help you in cases that aren’t covered by your health insurance. For example, your health insurance may exclude workplace accidents that would typically be covered by workers’ comp.
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.
Your workers’ comp policy can help pay for medical expenses, loss of income, retraining for employees, permanent injury and survivor benefits after a workplace injury.
The amount of coverage provided by your policy is regulated by state law and varies based on where you do business.
Coverage for medical expenses can vary depending on the injury, but a workers’ comp insurance policy will typically help pay for immediate and ongoing medical treatment, and rehabilitation costs.
For example, if an administrative assistant at your business has work-related wrist pain, workers’ compensation could pay for the initial diagnosis, ongoing treatment and physical therapy.
For people with physical jobs, even a small injury can make it difficult, or impossible, to work safely. Workers’ compensation insurance enables an injured employee to take the time they need to recover without worrying about lost wages while they are out of work.
Workers’ compensation will cover most of the employee’s wages while they are recovering. The percentage of coverage varies based on the state where the injury occurred.
Some injuries can prevent an employee 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.
For example, a furniture mover at a moving company could experience a long-term back injury. In that case, the employee could be retrained for a desk job.
You and your employees can be eligible for long-term benefits after an injury that never fully recovers or causes a permanent impairment. The amount and length of coverage varies on a case-by-case basis and is determined by the workers’ comp requirements in your state.
In the unfortunate event of a work-related death, workers’ compensation can help pay for burial expenses and provide financial help for the employee’s family.
A common misconception about workers’ compensation is that it’s only needed when a business has employees.
In fact, many self-employed workers, sole proprietors and independent contractors purchase coverage for the financial protection it provides or to meet contract requirements with clients.
It’s required to get a license for some professions, especially in construction. For example, many states ask for proof of workers’ comp insurance with their general contractor license requirements.
If you don’t have workers’ comp and you are injured at work, you also might not be covered by your personal health insurance. It’s important to read your policy documents carefully to make sure you are protected.
If you need to quickly obtain coverage to satisfy a client, bid or professional license requirement, you can instantly access your certificate of insurance as soon as you purchase a policy with Next Insurance.
Learn more about workers’ comp insurance laws and requirements in the following states:
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.
Workers’ comp policies do not cover injuries resulting from a violation of the law. Examples include intentional injury, knowingly employing employees in violation of the law, failure to comply with health or safety regulation, and coercion or discrimination against any employee.
Many states exclude injuries caused by the worker’s intoxication, by alcohol or other regulated and banned substances. Laws in certain states permit an employer to deny a claim if the worker tests positive for elevated levels of illegal substances if the test is administered within a certain amount of time of the accident occurring.
Injuries that happen when an employee is not performing activities that benefit the employer are excluded. Examples include injuries those arising from commuting to and from work, voluntary recreational activities while at work, or horseplay and fighting occurring at the workplace that are not work-related. Depending on the state you are doing business in, definitions for what activities qualify as directly benefiting the employer may differ, and what is covered may differ as a result.
This is a brief summary of your policy and does not supersede the policy documents. If you want full details, please call us.
Workers’ comp coverage can start as low as $14 a month when you purchase a policy with Next Insurance. Several factors are used to determine the cost of workers’ compensation insurance, including the number of employees at your business, your payroll, the location of your business and other details.
That’s why there’s a significant difference between insurance costs for construction businesses and accountants. Both types of businesses face risks every day, but there’s more exposure for construction workers at job sites with raw materials, heavy machinery and power tools.
Other factors that influence the price of your coverage:
No matter where you purchase insurance, you’ll need to share:
These factors are combined with state pricing guidelines to calculate your workers’ comp costs. If most of your employees work at desk jobs, you’ll typically pay less than a business where employees work at a job site.
Workers’ compensation is highly regulated at the state level. This influences the cost of your coverage. The price you pay is determined, in part, by the state where you do business. If you have employees in multiple states, you’ll need to meet the requirements of each state.
Having a history of workers’ compensation claims and workplace injuries can affect the price of a new policy.