A small business owner’s guide to workers’ comp insurance
Workers’ compensation insurance, commonly known as workers’ comp, is insurance that covers medical expenses and a portion of lost wages for employees who become injured or ill on the job. Coverage also includes employee rehabilitation and death benefits.
How does it work?
Each state has its own unique set of workers’ compensation laws that employers must follow. These regulations help ensure that employers provide coverage for the cost of work-related injuries or occupational diseases, regardless of employee negligence.
An employee can only receive benefits if their injury or illness relates to their job duties or employment. Workers’ comp insurance could cover injuries caused by lifting heavy equipment, slipping on a wet or oily surface, or sustaining injury due to fires or explosions.
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.
Who needs it?
Workers’ compensation insurance is required by law in almost every state. Some worker exemptions exist, so you’ll want to check with your state to find out if coverage is mandatory for your business.
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.
They can, however, sue you for things that aren’t covered under the workers’ comp portion of your policy. Employer’s liability insurance is also included in your policy to pay for court costs and legal fees if you’re involved in such a lawsuit.
How much does it cost?
Workers’ compensation insurance rates are based on various factors including your state, payroll and claim history.
Discover how these and other factors influence your workers’ compensation cost. You may also contact us directly to speak with an in-house agent who can answer your questions and help you with a quote.