Accidents happen. An employee can slip and fall; a piece of machinery could malfunction; an illness could occur as a result of a worker being exposed to something dangerous on your worksite (unbeknownst to you). In the event that someone you employ becomes injured or ill while on the job, you are held legally responsible. For that reason, you need to make sure that you have workers compensation insurance.
Does My Business Need Workers Compensation?
It’s The Law. In most states, businesses are required by law to have workers compensation insurance. The laws do vary from state to state, so make sure that you do familiarize yourself with the laws that apply in your state. Typically, business owners can purchase a policy through an insurance agent; however, some states do require businesses to get coverage via a state-operated funds.
It Protects Your Business. workers compensation insurance coverage not only protects your employees, but it also protects your business. Though cases do vary, often times, when a business offers workers’ comp coverage to its employees, workers agree to forfeit their rights to sue a business for negligence in the event of an accident or an illness. This will reduce costly the financial hardships that are associated with lawsuits, as well the damages that legal action could have on your business in the future. For example, businesses that have had lawsuits filed against them for wrong-doing in the case of an accident often have their reputation marred, which could have a negative impact on the success of the business.
It’s Beneficial For Employees. Should an employee be involved in an accident and sustain an injury, or falls ill as a result of being exposed to a toxic chemical or fume while on the job, and is unable to work, workers comp will cover their expenses. These expenses include lost wages, medical costs, and more. In essence, workers comp serves as a financial safety net for your employees.
Assists With Recovery. Not only does workers’ compensation insurance assist with lost wages and medical expenses, but it also covers some of the cost that is associated with any training or rehabilitation that employees may need so that they can return back to work. Moreover, should an employee be unable to return to work, the insurance will provide him or her with training that will better suit his or her new needs.
Helps Employees’ Loved Ones. Workers’ compensation insurance can also protect the loved ones of your employees. For example, it protects from the hardships that lost wages could impose on a family. In the extremely unfortunate event that a worker perishes as a result of his or her injuries or illness, workers comp insurance will likely cover at least some, if not all, of the funeral expenses. Some packages also offer surviving family members benefits.
What Does Workers Compensation Insurance Cover?
A workers compensation policy usually has two parts:
- Workers Compensation Insurance: The first part of the policy fulfills statutory obligations under the workers’ compensation laws. Under this section, the insurer agrees to pay all workers compensation benefits and other benefits that the employer must legally provide to covered employees who have a job-related injury or an occupational disease.
- Employers Liability Insurance: The second part of the policy covers employers against lawsuits by employees who are injured in the course of employment, but whose injuries (or diseases) are not compensable under the state’s workers compensation law. This part is similar to other liability insurance policies where negligence must be established before the insurer is legally obligated to pay.
What Workers Compensation Insurance Doesn't Cover
- Self-inflicted injuries
- Felony-related injuries
- Injuries an employee suffers off the job
- Injuries claimed after an employee is terminated or laid off
- Injuries from a fight started by the employee
- Injuries caused by intoxication or drugs
- Injuries resulting from horseplay or violation of company policy
- Injuries to an independent contractor
How Much Does Workers Compensation Insurance Cost?
- Wages, salaries, commissions, and commission draws
- Bonuses. This includes stock bonuses.
- Overtime pay, holiday pay, vacation pay, and sick pay
- Pay for piece work
- Profit-sharing plans and incentive plans
- Meals or lodging that makes up part of pay
- Expense payments the employer makes to the employee that are not substantiated by documentation.
The complete list is in the NCCI Basic Manual for Workers Compensation and Employers Liability Insurance. This abbreviated list gives just an idea of the many types and extent of remuneration and the fact that it may be more than just a paycheck.
Some types of remuneration are not included and are not used to calculate premium. Those include tips, employee awards, severance pay, military duty pay, food, lodging, uniform allowances, and similar expenses for company-sponsored travel.
Overtime pay is the most complicated issue involved in accurately determining remuneration because the increased per hour paid for that overtime cannot be used. The base per hour remuneration can be used but not that increased per hour rate. Incentive pay or shift differential pay that encourages employees to work unpopular shifts or days is not treated as overtime pay. When the employer maintains good payroll records that clearly indicate the amount of overtime, the remuneration used to calculate the premium does not include the additional or extra rate of pay for the overtime.
How much does Workers Compensation insurance cost? The cost of workers comp insurance varies tremendously, depending on your industry and location. If you are in an industry where work-related injuries are more likely to occur or in a state where insurance premiums are higher, then it will cost more.
For example, for a roofer, tree trimmer, or demolition company, the cost could be $17 per $100 in payroll, or even higher. On the other hand, the cost to cover a attorney, accountant or real estate agent could be under $0.20 per $100 of their payroll. So, for an employee that earns $40,000 a year, a blue collar contracting company could pay around $6800, where a white collar business may pay just $80.
Also your workers comp rates can go up or down depending on your accident history, much like they would for most types of insurance.
Understanding The Workers Compensation and Employers Liability Insurance Policy
Do you own, operate, or manage a business which includes at least one employee? Are you familiar with the laws of the states where you operate regarding workers compensation insurance coverage?
The Workers Compensation and Employers Liability Insurance Policy covers your statutory liability as an employer under state workers compensation laws. It pays for medical treatment because of injuries and indemnity payments for employees disabled by work-related accidents. It also provides tort liability coverage for legal actions brought against you for bodily injuries to your employees that fall outside state workers compensation laws.
The coverages provide the benefits that the law requires for injuries employees sustain that arise out of and in the course of their employment, including resulting disease or death, subject to certain policy terms and conditions. In addition, if the employee injury is not compensable under applicable state workers compensation laws or occupational disease acts, Employers Liability Insurance responds to the employee’s allegation of negligence by you, again subject to certain policy terms, conditions, and exclusions.
PART ONE - WORKERS COMPENSATION INSURANCE
Workers compensation insurance applies to bodily injury by accident that occurs during the policy term. It also includes bodily injury by disease caused or aggravated by employment conditions. The insurance company pays benefits you are required to pay when they are due.
The policy covers your entire liability as an employer under the workers compensation laws of the state or states involved. This includes a number of statutory provisions included and referred to in the policy, if required by state law.
PART TWO - EMPLOYERS LIABILITY INSURANCE
PART THREE - OTHER STATES INSURANCE
PART FOUR - YOUR DUTIES IF AN EMPLOYEE IS INJURED
PART FIVE - PREMIUM
PART SIX - CONDITIONS
Further Reading On Worker's Comp Insurance
- Workers Compensation Insurance
- How To Reduce Workers Compensation Premiums
- How To Understand Your Workers Compensation Experience Modification Factor
- How Much Does Workers Comp Cost In California?
- How Much Does Workers Comp Cost In Texas?
- Texas Workers Compensation Laws For Employers
- Uninsured Subcontractors Workers Compensation
- Workers Comp Insurance Audit
- Workers Compensation Classification Codes
- Workers Compensation Code 8810
- Workers Compensation For Restaurants
Get A Workers Compensation Insurance Quote
Different States Workers Compensation Insurance
If you are looking for state specific Workers Compensation Insurance quotes, costs and information: