As an employer, you’re responsible for creating a safe workplace. But sometimes, no matter how careful you are in implementing safety procedures and protocols, workplace accidents can’t be avoided.
If an employer is injured or becomes ill as a result of a workplace accident, your business is technically on the hook for related expenses, such as medical bills and lost wages. That’s where workers’ compensation insurance comes into play.
When you have workers’ compensation insurance, it can help to protect your business and your finances after a workplace accident occurs. This coverage gives you the peace of mind that, if a workplace accident does occur, your policy will help to cover the expenses you could face.
In many states, employers with one or more employees are required by law to carry workers’ compensation insurance. It’s best to check your state’s specific requirements, since they can vary depending on your state. If you’re required to carry workers’ comp coverage, then you will need to have that insurance in place as soon as you hire your first employee.
If your business has employees but doesn’t carry workers’ comp insurance, you could face a penalty including fines starting at $1,000 and even jail time. The penalty varies depending on your state and the number of employees.
Beside the fact that workers’ compensation insurance is required by law, it also helps to protect your business and your own financial interests. Since workers’ comp policies help to cover the costs of workplace illnesses and injuries, a policy can help you to avoid having to pay expensive medical bills or legal fees resulting from a lawsuit.
Having workers’ comp insurance can also help to boost your employees’ trust in your business. Workers’ comp can help reassure employees that if they are ever injured, they will receive the financial support they need, even if they’re out of work for a while.
Workers’ compensation insurance coverage helps to pay for several types of expenses that your business would otherwise be responsible for after a workplace accident or injury:
A workers’ compensation policy covers several expenses related to workplace injuries or illnesses, but there are several expenses that it won’t cover:
When you shop for insurance, you can compare workers’ compensation insurance quotes from different insurance companies and choose the policy that’s best for your needs. Once you buy a policy, your business will be responsible for paying the policy premiums.
If a workplace injury or illness occurs, an employee will need to file a claim with your workers’ comp policy. The insurance company then works with the employee, evaluating their needs and identifying a settlement for that claim.
Since the employee files a claim with the insurance company, and not with your business, your business can avoid a lawsuit and the employee receives the financial support they are owed.
Since workers’ compensation insurance is a cost of doing business, your insurance costs are probably tax-deductible. Your business tax professional can advise you on how to report your insurance expenses on your tax return.
In many cases, yes, businesses that have one or more employees are required by law to carry workers’ comp insurance. Specific requirements vary by state, so check your state’s workers’ comp laws to make sure your business is in compliance.
A history of workers’ comp claims will drive up your premiums, so keeping your insurance costs down starts with creating a safe workplace. Consider ways to improve employee safety, such as by implementing a thorough employee training program, establishing safety tools, and providing your employees with up-to-date, quality personal protective equipment.
You can also shop around for worker compensation insurance. Get worker compensation insurance quotes and compare policies from different insurance companies to find the best rates today.
