As a business owner or manager, it’s your responsibility to make sure your company has an affordable, high-quality workers’ compensation insurance plan. Regardless of which industry your business serves, every business requires some level of workers’ comp coverage. Should an employee be injured on the job, this insurance plan will provide the costs of medical care so you, the employer, don’t have to pay out of pocket.
Especially if you’re a new business owner, purchasing insurance for your company can be a confusing task, and you’ll want to know everything you can before starting to shop insurance providers. If you already have a workers’ comp policy but are considering switching, it’s the perfect time to review how workers’ comp works so you can find the best policy available.
Here’s what you need to know about workers’ comp settlements:
1. What Workers’ Comp Insurance Covers
Workers’ compensation insurance covers the majority of work-related injuries and any resulting complications. Benefits for employees include:
· Medical Bills– When an accident takes place at work, workers’ compensation covers: the employee’s ride in the ambulance, a visit to the emergency room, surgeries, and medical bills associated with hospital stays and physical recovery.
· Wages Missed During Recovery– When an employee suffers a severe injury that prevents them from returning to work, workers’ comp will pay them a partial sum of the wages they miss out on during their rehabilitation.
· Worst Case Scenarios– In the case of a fatal work injury, workers’ compensation policy covers some death benefits for the deceased’s family members. For example, workers’ comp insurance may cover funeral expenses when a work-related injury leads to death.
However, there are a few things that are outside the scope of a workers’ comp insurance. For example, workers’ comp does not cover: self-inflicted injuries, injuries resulting from a crime, injuries resulting from a violation of company policy, and injuries that occur off-site.
2. It Protects You, Too
If you don’t have a policy for workers comp settlement and an employee decides to sue you and take the lawsuit to trial, your business may suffer a terrible financial loss. Should an employee file an injury or illness-related lawsuit, workers’ comp insurance helps cover the employer’s costs for court fees, hiring an attorney, and the final settlements. In turn, the insurance policy doesn’t just protect your employees, but it also you and your company.
3. It’s the Law
Almost every U.S. state requires employers to purchase workers’ comp insurance. Whether you employ two workers or 2,000, you have to protect them with workers’ comp.
If your state requires you to have worker’s compensation and your company is found without it, you can be fined, taken to trial, and even imprisoned for disobeying the law. To find out the insurance requirements for your state, check your state’s workers’ compensation board website.
4. What Affects the Cost of Workers’ Comp Insurance?
The cost of workers’ comp insurance depends on the insurance provider you choose, the type of business you run, and the type of work your employees perform. Other cost-determining factors include:
· Annual Payroll- The fewer employees you have, the lower your premium will cost.
· Your Industry- The risk of work-related injury and illness varies significantly across industries. Employes in high-risk industries are more likely to be injured at work and have to file a claim. In turn, workers’ comp policies come with higher premiums. Industries that insurance companies consider high-risk include construction, transportation, agriculture, manufacturing, and other jobs that require heavy manual labor.
· Your Claims History- If your business has already claimed insurance in the past, it signifies to insurers that your employees are at high risk, thus driving up your premiums.
5. Where Do the Funds Go?
Where the money you pay for workers’ comp insurance goes depends on where you purchase your insurance. If you have insurance through a private insurance company, the insurer handles the funds. Some businesses choose to obtain workers’ comp insurance through a state fund (in some states, this is actually required). Before doing further research on insurance providers, be sure to check whether your state has a competitive state fund or monopolistic state fund.
Of course, every employer wants to avoid workplace injuries and illnesses. However, accidents are some times inevitable, and you need to have financial protection. While it’s essential to have the right workers’ compensation insurance, you should first and foremost be vigilant about employee safety and training. To avoid workplace accidents from occurring, make sure you discuss proper work practices and safety precautions with your employees.