3 Important Things to Know Before You Purchase Workers Compensation Insurance
If you own a business and you employ anyone outside of yourself, chances are, you need to carry workers' compensation insurance. However, before buying a worker's compensation insurance policy, there are a few things you need to understand and know about the coverage and what steps you can take to keep your costs affordable.
Thing #1: The Very Basics
Workers compensation insurance is insurance that you carry to protect employees who either get hurt or ill due to the work that they are going for you. It covers injuries and illnesses that occur as the result of an accident at work, such as falling down, and the result of repeated exposure to something harmful, such as hearing loss due to working around loud equipment.
Thing #2: 5 Basic Benefits
Workers' compensation is broken down into five different benefits that an injured worker could qualify for.
- Paying for the medical care of the injured worker.
- Temporary disability benefits, which are designed to pay the worker the wages they are losing out on while they recover from their illness or injury.
- Permanent disability benefits, which come into play if an employee is so seriously injured that they can't work anymore.
- Supplement job displacement benefits, where the injured worker can work, but not at the job they had before. This benefit pays for them to be retrained or earn a new skill so they can continue to be part of the workforce.
- Death benefits, which are paid out to a worker's dependents if they die as the result of an injury or illness from work.
These five basic benefits are offered as part of any worker's compensation insurance package you purchase for your business.
Thing #3: Requirements Vary
Each state has its own rules regarding when a business has to carry workers' compensation. In some states, you have to carry it if you have a single employee, and in other states, you need to have a certain number of employees, such as three or five or more, to be required to carry workers' compensation insurance.
Many states levy fines against businesses that don't carry worker's compensation insurance. Check with your state to find out what the employee requirements are to legally compel you to have workers' compensation insurance. Regardless of the legal requirements, it is smart to carry a workers compensation policy, as without it, if a worker is injured or becomes ill at work, you will have to bear the costs of any lawsuit they filed against you. Any compensation they earn through the courts.
Responsible business owners carry worker's compensation insurance. It helps to protect one's employees if they become injured or ill due to work as well as you from legal fines, court costs, and settlements. If you run a small business, talk to an insurance representative to find the best plan for your business.