What is Workers’ Compensation

No matter what type of business you run, your employees can get hurt. Luckily, workers’ compensation insurance, also known as workers’ comp, can help give your employees the benefits they need if they suffer a work-related injury or illness.

The coverage is mandated by each state and the wage and medical benefits vary by state. Workers’ compensation is purchased by a business to protect themselves and their workers in case on an incident.

What does it cover?

Workers’ compensation insurance covers when an employee has an injury or illness that is related to their job duties or employment. This could cover injuries caused by lifting heavy equipment, slipping on a wet or oily surface, getting in an accident while driving on the job, sustaining injury due to fires or explosions, etc. Coverage also includes employee rehabilitation and death benefits. Certain types of employees, such as seasonal workers, may not be covered by workers’ compensation in some states.

If an employee isn’t acting within the scope of their employment and becomes injured, such as playing football with friends on a day off, workers’ compensation insurance won’t cover them. In addition to injuries that occur outside of work, injuries that occur intentionally, while commuting to and from work, or due to intoxication or substance abuse wouldn’t be covered by workers’ compensation.

How does it work?

• Missed wages if your injured or ill worker needs time off from work while they recover.
• Medical expenses to treat your injured or ill employee.
• Vocational rehabilitation if your worker needs ongoing care to help them get back to work.
• Death benefits, like funeral costs, if a worker passes away in a work-related incident.

Rates for individual businesses are determined by comparing similar kinds of businesses based on the prior five years of loss costs. This provides an equitable system where rates are charged to a similar degree with the actual loss experience of the business. Economic factors for each state are then overlaid onto this data to determine the rate for each class in a given state.

A system called “experience rating” allows for modification of the class rates based on the loss history of an individual business. This system provides business owners a significant amount of control over the cost of their workers’ compensation premium – safe businesses are rewarded with lower premiums and unsafe businesses are penalized with higher premiums.

When filing a workers’ compensation claim, the injured parties must visit a healthcare professional immediately so a doctor can provide medical reports to support any claims. Once these claims are approved, the recipient will receive their compensation payments and can return to work when they feel they are ready.

Should I get workers’ compensation insurance?

All states, with a small number of exceptions, require businesses with employees who are not owners, to purchase workers’ compensation coverage for those employees. Businesses that fail to provide workers’ compensation coverage can face severe and costly repercussions including payment of claims out of pocket, fines and possible imprisonment, as well as possibly losing the right to conduct business in the state.

• Providing benefits to your employees that have work-related injuries or illnesses
• Limiting your business’ liability in lawsuits for work-related injuries or illnesses
• Making sure you’re following your state’s workers’ comp laws
• Helping injured employees get back to work in their old role or a new one

Choosing to forgo workers’ comp coverage puts your business at high financial risk. Not only can you face a lawsuit for workplace injuries, but you’ll likely be fined for breaking the law. Keep in mind, workers’ comp insurance protects not only your employees, but your small business too. For example, if your insurance is compliant with state law, an employee who receives benefits can’t sue you for their injuries or lost wages.

Contact one of our agents today to find a solution that creates a safer and more productive workplace.