Whether you’re an employee or a business owner in the United States, every business has to address the issue of worker’s compensation coverage. You’ll have to know how it works, why you need it and how you can pay less for it.
Not all states require worker’s comp coverage to be provided in the form of an insurance policy from an insurer. Some other states don’t even have a worker’s compensation requirement for their businesses.
It is important to take note of, however, that not being required to have workman’s comp coverage doesn’t let off employers the liability when an employee gets injured in the line of work. Worker’s comp insurance is like any other type of business insurance – it provides financial protection against loss. The state minimum requirements and coverage exemptions vary for almost each state so we will not be covering based off legal requirements. If you wish for further legal information, it’s best to contact and speak with a lawyer.
So, who needs workman’s comp?
Any type of business, whether just a start-up or a big corporation, as long as there are employees working for you either full-time or part-time is susceptible to extensive out of pocket costs especially if an employee becomes injured or sick on the job. This means that not having any insurance does not get you off from paying work-related costs for illnesses and injuries. Even if your business is exempted from having to carry coverage, you should carefully weigh the potential costs of not having an insurance to protect you and your employees versus the savings you can get from paying insurance premiums.
How can you pay less for it?
Workman’s comp premium ranges from minimal to very high which will depend on several factors such as number of employees, the risk environment, the industry and claim history. For you to pay off the lowest possible rate for coverage, it’s best to avoid assigned risk. This means that the business you’re in is not considered good risks since it has an extensive claim history or it represents unusual risks. The premiums for these are usually higher. You should always inquire and insist on knowing whether your policy has been issued an assigned risk.
Improve your safety conditions at work. Communicate the importance of safety to the employees. Empower them with knowledge that a safer workplace is more profitable and it also lowers the cost of expenses such as workman’s comp insurance.
What does it cover?
This information is both for the employer and the employee for awareness. The areas included are:
- Medical treatment
- Lost wages up to two-thirds of the employee’s salary
- Loss of limbs or injuries caused while at work
- Liability insurance for the company/business when there will be lawsuits filed by the injured employees
This may seem like another unnecessary business expense but offering worker’s comp can help and protect you from litigation should your employee becomes sick or injured on the job. It’s best to do your homework and understand the risks and trends of work-related injuries and illnesses. Make the necessary changes to your system and processes that can enhance safety in your work environment. When you take the time to understand the when, why, where and how of the injuries so that you can take effective steps to improve the safety conditions of your business.