Workers’ Compensation Insurance
Keeping your employees safe at work is important to most business owners. But when a worker does suffer an injury, workers compensation coverage provides your employees with the protection they need and provides you with peace of mind that they’ll be covered.
It’s the law, but…
Workers’ compensation insurance is often mandatory for many businesses if they have employees, no matter what the job requires. It covers medical costs and a portion of lost wages for employees who become injured or ill on the job.
Workers’ Compensation is like an airbag for your business. When trouble strikes, it deploys to help your employee get back to work as fast as possible, minimizing the damage to your business.
If that sounds like a luxury to you, keep in mind, it’s probably a good thing for your business. Imagine having to pay for a slip-and-fall accident or a case of carpal tunnel syndrome straight out of your business checking account.
It’s a good thing for you, and your employees.
Workers’ comp insurance may also protect you from being sued by employees for workplace conditions, which a court finds your company liable in causing an injury or illness to your employees.
Modern workers’ compensation laws today offer fairly comprehensive and specific benefits to employees who suffer injury or illness in their workplace. Such benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation. If you fail to carry workers’ compensation insurance or meet a state’s regulations, you can be exposed to paying for these benefits out of your own pockets and also paying penalties demanded by the states.
In most areas, employers like you can meet workers’ compensation obligations by purchasing an insurance policy. However, states and U.S. territories like North Dakota, Ohio, Puerto Rico, the U.S. Virgin Islands, Washington, West Virginia, and Wyoming require you to get insurance coverage exclusively through state-operated funds. If you’re located in the following areas, you need to get coverage from the specified government-run fund instead of getting them from private insurance companies. These are usually called monopoly state funds. There’s no single cohesive set of rules governing benefits, coverage, or premium computation since workers’ compensation is usually regulated by the individual states and territories. If your business decides to expand to a different state, you will have to deal with a brand new set of rules even though you have enough experience in dealing with one state’s workers’ compensation system.
What if it’s caused by employee carelessness?
Under normal circumstances, the fault does not matter in a workers’ compensation claim. And each state has its own workers’ compensation system, which is a mandated program to compensate employees who are injured in a workplace accident or rendered ill because of the job.
It’s designed to ensure payment by employers for some part of the cost of injuries, or in some cases, of occupational diseases, received by employees in the course of their work.
So who needs workers’ comp insurance?
This is the very first important question that you should need to address since not every business like you is required to obtain workers’ compensation insurance. Basically, sole proprietors and partnerships are not required to purchase this insurance policy unless they have employees who aren’t owners. In most states, they allow sole proprietors and partners to cover themselves for workers’ compensation in case they decide to. However, this isn’t really required. Kindly also note that these rules differ from every state and can change over time. So, we greatly suggest checking your state’s regulatory agency in order to make sure what are the rules set in your state jurisdiction.
Some states also don’t require an employee to be covered if the person is paid solely by commission. Again, we suggest checking with the workers’ compensation regulators in your particular state to see how this is handled.
Always remember that if you have employees who are not owners of the company, you would need workers’ compensation insurance. For employees, if you’re working in most state’s workers’ compensation laws, you might have employees you are not aware of. This is due that most states will treat an uninsured contractor or subtractor as your employee in case he or she gets injured while doing work under your company.
The basic workers’ compensation insurance policy is a very unique insurance contract in many different aspects. This doesn’t have a maximum dollar amount limit to its main coverage, unlike other liability insurance policies. For example, your auto insurance policy has certain maximum amounts the policy covers per accident. If the expenses of a particular accident have exceeded the limit, you’ll need to pay it out of your own pocket or you’ll need to get an umbrella liability policy. Workers’ compensation insurance policies also have a dollar limit but this is only part two of the coverage; the employer’s liability. However, for part one, this part is for an employer’s statutory workers’ compensation liability and has not set a limit. Once your insurance policy is already working, your insurer is now responsible for all the employer’s claims that may arise for workers’ compensation benefits in the states covered by the policy.
Workers’ Comp Insurance Basics
Since workers’ comp insurance typically only covers injuries or illnesses when they occur as a result of duties performed on the job or while at work, the scope of the coverage of the policy is limited to duties performed by employees.
Injuries that may be covered by workers’ comp insurance include lifting heavy equipment, slipping on a wet or oily surface, or sustaining injury due to fires or explosions.
Workers’ Compensation Insurance may cover:
- Medical bills for employees hurt or sickened at work.
- Ongoing care, including rehabilitation.
- Wages missed while recovering (often partial).
- Employee lawsuits over injuries (through Employer’s Liability Insurance).
- Funeral expenses, if an employee is killed on the job.
- Death benefits to support the deceased’s family.
It does not cover:
- Third-party lawsuits.
- Lawsuits over professional errors.
- Wages for a replacement worker.
- Parental leave benefits.
- OSHA penalties.
Worried about the cost?
We specialize in covering local businesses like yours. We have everything you need right here, including:
- Monthly payment options to help spread out your payments so you can better manage your cash flow
- Coverage of temporary staff, full-time employees, and independent contractors
- Claims responsiveness when time is of the essence, especially in the event of an insurance claim
- Tailored coverage for the specific risks of your field and industry
- Knowledgeable agents who provide exceptional, passionate service
- Coverage for contracts satisfying most standard contract insurance requirements
- Fast and simple online quotes, or helpful agents, immediate coverage
Why We’re Different
You may think you want the cheapest insurance you can find, but realize you may not be getting everything you bargained for…
While most insurance products are similar in price and function, insurance providers are very different when it comes to structuring a policy that actually covers you.
There’s no such thing as a one-size-fits-all insurance policy when it comes to your business.
We’re your neighbors. We protect businesses and people we know and care about, and that means we always look for ways to protect you better, including carefully choosing the insurance companies we represent to be both affordable and responsive.
Contact us and let the professionals at our company help you forge the strongest shield possible to help you protect the things you are working hard to build.
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Explore and learn more about some unique risks as well as the related insurance solutions
Pre-Employment Physical Exam
Possible Liability: Taking shortcuts and just hiring employees hastily may cause problems in the long run.
Solution: A pre-employment examination should be required where a list of physical requirements of the job opening should be given to the company’s accredited medical provider. This will ensure that only healthy and capable employees join your team.
Possible Liability: Work-related injuries can come from not being trained to do their work safely.
Solution: Insurance companies may have training classes or tools to help make sure your employees know the right techniques that are critical to many job functions. AIS has a training platform that may be able to help you with this. Check out our training packages.
Possible Liability: Employees misunderstanding the worker’s comp process might not report claims or might be afraid that incentives in line with sick-free/injury-free days would be affected.
Solution: Proper education of any company’s workers compensation guidelines and return to work policy is essential.
OSHA Consultation Service
Possible Liability: Many employers are worried that the next OSHA inspections would bring them fines and citations.
Solution: OSHA offers free on-site consultations for SMEs (small and medium-sized businesses) across the United States that prioritize highly hazardous working environments. Consultations are different from inspections. Consultants help identify hazards, give compliance advice in line with OSHA guidelines, and help set up an injury and illness prevention program.
Education and Open Communication with Employee and Medical Providers
Possible Liability: Employees confused about who to inform and file claims or even having an open work comp claim for longer than necessary.
Solution: A good working relationship with your medical provider can also ensure that employees are well taken care of and that you’re made fully aware of their medical status. Clear and constant communication plays a vital role in the recovery and claims process.
EMR and Payroll Audit
Possible Liability: In the past year alone, 7 out of 10 companies across the US have incorrect EMRs and more than 8 out of 10 of these audited by payroll are also incorrect. Both highly affect workers compensation policy coverage.
Solution: Allowing your insurance agency to work closely in payroll audits, monitoring of claims, and communicate with your claims adjustor will help mitigate risks of increasing your EMR.
Returning to Work
Possible Liability: Injured employees might need time to recover; however, relying on the work comp insurer and/or the medical provider for communication can make recovery time longer than it should.
Solution: Informing your insurance company and medical provider about your return to work program is important. If the worker needs more time to recover, this can be communicated faster, and should they be cleared to return to a lighter workload, this can be easily arranged as well.
DISCLAIMER: Consult actual policy for exact terms and conditions or talk to your insurance agent for clarifications.
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