As a business owner, if you have at least one employee and are based in any state other than Texas, you have a legal obligation to carry
workers' compensation insurance to compensate employees who suffer an occupational injury, illness, or fatality. This includes white-collar workers, who are vulnerable to occupational health problems such as backaches and obesity, as well as injuries from slips, trips, and falls.
With that in mind, here are the 5 W's of workers' compensation insurance that you need to know about.
What Is Workers' Compensation Insurance?
According to the
Insurance Information Institute (III), workers' compensation insurance is a commercial insurance policy that pays for medical costs, lost wages, and death benefits in case your employee gets injured fall ill or dies at the workplace. In exchange, the employee gives up the right to sue you in case they get injured or fall ill as a result of your negligence. While workers' comp is mandatory in most states, you can also decide to opt-out, depending on your state's laws.
Why Do I Need Coverage for My Business?
Even though it is a legal obligation to have workers' comp, most employers purchase this coverage due to the numerous benefits that come with it. That said, here is a look at why you need this coverage for your business:
- Lower your expenses - If you don't have workers' compensation insurance, you will have to pay for medical expenses, lost wages, or death benefits out of pocket in case of a work-related injury. While this may not be such a big deal if your business is booming, you will incur unnecessary expenses that could otherwise be avoided.
- Cover your workers - Healthcare is among the most expensive services in the U.S., according to the Peter G. Peterson Foundation. This means that without workers' compensation or health insurance, most American workers will not be able to afford medical care. With this in mind, purchasing workers' comp can go a long way in helping your employees access healthcare.
- Avoid confrontation with the authorities - Since the law requires you to carry workers' comp, having it is the easiest way to stay on the right side of the authorities. Otherwise, you will most likely pay fines, incur penalties, or even lose your license.
- Protect yourself from lawsuits - Since workers' compensation coverage gives you the exclusive remedy, lacking it means that your employees will have the right to sue you in case your negligence causes their injuries.
- Build your reputation - Generally, lawsuits and employment-related feuds ruin the reputation of your business to investors, clients, and even candidates. One way to avoid them is to purchase workers' comp and keep your employees satisfied with the working environment. In case of injuries at the workplace, claim settlement will prevent lawsuits and disagreements that may result. Additionally, workers with guaranteed coverage tend to be more productive at work since they are motivated. That said, smoothen your business operations and have peace of mind with the right workers comp in C.A.
Who Needs to Be Covered?
This insurance policy is necessary for both full-time and part-time employees, including those on a contract basis. In other words, provided you are an employer, you need to cover your employees regardless of how many they are. However, independent contractors such as freelance web designers are not eligible for workers' compensation insurance coverage. It is for this reason that some rogue employers classify some of their employees as independent contractors to evade taxes as well as workers' compensation insurance premiums. Take note that this is a serious offense and may cause you to pay huge fines or serve a jail term.
When Should I Have a Policy or File a Claim?
If you are a sole proprietor without employees, workers' comp may not be necessary for you. However, be sure to purchase the right workers' compensation insurance immediately after you hire your first employee. Additionally, any subsequent worker that you hire will require coverage from occupational accidents and illnesses. Take note that this policy does not cover the injuries that occurred before you purchased it, and hence, ensure you get it as soon as you hire a new employee. On the other hand, filing a claim should only happen if a work-related injury or illness has occurred. Below are some of the requirements for the insurance company to settle a workers' comp claim:
- You must be an employee
- The injury or illness must be work-related
- You should report and file the claim within the allowable time
While you have an obligation to report an injury immediately it happens, you may have up to 3 years to file the claim, although this varies from one insurer to another. To increase your chances of receiving compensation, ensure your injury report is honest and accurate.
Where Can I Get Workers' Compensation Insurance?
Currently, there are more than 5,900 insurance providers in the U.S., according to the
National Association of Insurance Commissioners (NAIC). This means that you can possibly land a workers' compensation package that suits your needs and budget if you compare deals from different insurance carriers. If you are a government employee, the federal government will offer you coverage through one of its workers' compensation programs.
These workers' comp tips will guide you towards getting the right workers' compensation coverage for your employees. Looking for reliable commercial coverage? Let the professionals take care of your insurance needs. At
Little & Sons Insurance Services, our team of experts has been providing California residents with customized insurance services since 1922. Contact us today for reliable business insurance.
