Within the U.S., every state has its own rules and regulations concerning workers’ compensation insurance. These laws protect both employers and employees and create a financial safety net for when workplace accidents occur. Generally speaking, every company operating within the U.S. must have a workers’ comp policy (though Texas does not require it, and most stares have a few exceptions).
Whether you run a business with six employees or six thousand, you need to understand the ins and outs of workers’ compensation so you can find the best policy for you and your workers.
What Is Workers’ Comp?
Workplace injuries or accidents happen even in the safest work environments, and workers’ compensation insurance covers this liability. In general, workers’ comp covers any workplace or work-related injury, regardless of who’s at fault. However, employers should keep in mind that there are a few nuances of workers’ comp policies:
- Workers’ comp can cover offsite incidents that occur while an employee is performing work-related duties or while traveling to and attending work-related functions.
- Workers’ comp insurance comes into play regardless of who causes the accident, may it be the injured employee, another employee, or a customer.
- Long-term illnesses caused by work conditions can also be covered by workers’ comp.
- Under certain circumstances, workers’ comp does not cover injuries. For example, if an employee is injured while breaking the law, defying company policy, or physically fighting with another person.
Understanding Employee Benefits
Workers’ compensation benefits help both employers and employees when unfortunate incidents occur. Employees are guaranteed medical care, and employers avoid paying for any expenses out of pocket. Most policies include coverage for:
- Medical expenses incurred through the injury or illness
- The cost of retraining employees
- Partial compensation for lost wages
- Compensation for permanent injuries
- Funeral costs in the case of a fatality
Some workers’ comp plans also help cover settlements and legal fees for the employer should an employee sue.
Calculating the Costs
Like any other insurance type, the cost and premiums for workers’ comp depend on numerous factors. For workers’ comp, your industry and the associated risks play a significant role in the calculation of premiums. Other determining factors include:
- Annual payroll amount– The smaller your team, the lower your premium
- The overall frequency and cost of injuries within your industry, represented by a risk classification code
- Your company’s claims history– The cleaner your record, the less you may have to pay
- Location-based risks, such as extreme weather conditions
- Inclusion or exclusion of officers or workers– Some states and insurance policies allow corporations to exclude owners and officers, or both, from coverage. This lowers the price of premiums.
Why Spend More on a Superior Workers’ Comp Policy?
Every employer should consider purchasing workers’ comp, even if not required in their state or given their circumstances. While weighing your options and comparing insurance providers, keep in mind the benefits of investing in a high-quality insurance policy:
- 1. Compliance with the Law– No business owner wants to get caught cutting corners. Working with an experienced insurance provider and agent will ensure that all local rules and regulations are accounted for through your workers’ comp plan.
- 2. Protect Your Company from Costly Court Settlements– Even the most loyal employee may file a lawsuit to pay for medical bills after an injury. Don’t put your workers to the test—get workers’ comp to protect your company from litigation and negative press.
- 3. Peace of Mind– Workplace injuries can be costly, and they not only leave a financial impact but a psychological one. As an employer, you’ll want the peace of mind that should an accident occur, your employees will be well taken care of.
- 4. Satisfied Employees Show Company Loyalty– If you offer excellent benefits, it’s easier to maintain trustworthy employees and avoid turnover.
- 5. Workers’ Compensation Protects Your Employees– Not all employees have the luxury of health or life insurance. Workers’ comp providers guaranteed coverage for work-related injuries, giving employees peace of mind as well.
For Greater Peace of Mind, Take Your Time
Insurance is a complicated business, and workers’ comp is no exception. To protect yourself financially and provide the best possible care for your employees, take your time understanding workers’ comp and your available options.