Every employer needs worker’s compensation insurance to help cover injuries and other issues associated with worker injury and their liability. What is workers’ compensation insurance? It’s insurance that protects a business from damages caused by workplace accidents where fault lies with the business.
It’s also a way for employees to receive fair compensation for those injuries without suing the employer. Many business owners don’t understand the importance of worker’s compensation insurance and open themselves up to serious repercussions without it.
Don’t lose your business because of a massive civil judgment. We answer your most asked questions about this needed business insurance.
What is Workers’ Compensation Insurance?
Before the early 1900s, there was little recourse for workers if they were injured on the job. They could sue the company for damages, but many workers didn’t have the money to fight. If they did fight, businesses usually won citing negligence by the employee, negligence of another employee and assumption of risk by that employee.
Injured workers wanted reform and by 1948 every date passed some version of worker’s compensation law. The laws cover most workers. If an employee is injured on the job, the employer must provide adequate compensation.
If the do, then the employer is protected from any lawsuits by the injured workers.
What Does Workers’ Compensation Insurance Cover?
Worker’s compensation has two distinct aspects: employee benefits and employer liability. The benefits include medical coverage for hospital, medication, physical therapy, associated with the injury. It also maintains as a percentage of the worker’s wage is paid during a temporary or permanent disability.
If the injury is so severe the worker can no longer do that job, then it covers vocational training to learn new skills. Finally, if the injury results in the death of the worker, then the spouse and children receive death benefits.
How much benefits the employer must provide varies from state to state.
If the injury is not covered by worker’s compensation insurance and the employees sue the business, the insurance protects the employer from the lawsuit.
How Do We Calculate Worker’s Compensation Premiums?
How much will it cost me? That’s one of the most common questions asked by employers. The premiums are based on several factors including the total number of employees covered, the salaries and bonuses paid annually and the class code of the various employees.
For example, if a company has 50 employees and 10 of them are in administration and 40 are on a factory floor, then these are two different class codes for the employees. Employees that are more likely to be injured because of manual labor, etc., cost more than clerical positions tat require little physical labor.
There’s also an experience rating based on the amount of worker’s compensation claims and losses of the business. If history is better than the average business in their niche, then their cost would be lower. If it was worse, then their cost would be higher.
You Can’t Afford to Not Have It
What is workers’ compensation insurance? It’s your safety net in case of an injury to one of your workers. You never know when an injury can occur, and you need to be prepared.
For more information about business insurance and worker’s compensation insurance, please explore our site.