What is Worker’s Compensation Insurance
Did you that everyday upwards of 9,000 people suffer disabling injuries on the job? More than a 100 will die from work-related accidents. As a business owner, you can’t prevent every accident that occurs in your workplace, but you can protect yourself and your employees from the financial hardship that follows by properly investing in Worker’s Compensation Insurance.
- What is Worker’s Compensation Insurance? — Worker’s Compensation Insurance is a fund set up by every employer to cover workers who are injured, become ill or are killed on the job. Worker’s Compensation provides payments to injured workers no matter who was at fault in the accident. This benefit covers time lost from work as well as medical expenses. The fund also provides death benefits to survivors in the event that an employee is killed while on duty. Worker’s Compensation Insurance usually provides coverage in the following areas:
- Injuries inflicted at work
- Medical treatment, including medications and surgeries
- Rehabilitation services
- Loss of limbs
- Lost wages
- Liability insurance for injury lawsuits
- Death
- Who Needs Worker’s Compensation Insurance? — Every state, excluding Texas, requires Worker’s Compensation Insurance for all businesses, even those that are home-based, although specific regulations may vary from state to state. An example of differing regulations would be that in some states, small businesses with fewer than 5 employees may not be required to purchase Worker’s Compensation Insurance.
- How is Worker’s Compensation Insurance Calculated? — Worker’s Compensation Insurance varies depending on the risk level of the work being performed. For instance, an executive assistant at a medical firm will incite lower costs than an engineer on an oil-rig. There are nearly a thousand occupational codes to define businesses and their basic risk factors. The premium on your policy will be calculated by each $100 you pay on your monthly payroll.
- Are there other options? — As a business owner, you have other options than purchasing a costly Worker’s Compensation Insurance policy. These options include:
- Self-insure — If your business has the funding, you could opt to self-insure your business against Worker’s Compensation claims. If you are self-insured, you guarantee to cover all costs associated with claims coming from your injured employees.
- Independent Insurance — If your business relies heavily on independent contractors, you may be able to require your independent contractors to carry their own Worker’s Compensation Insurance. However, you will have to purchase a Worker’s Compensation Insurance policy on those employees that are not classified as independent contractors.
- What if I Don’t Want to Purchase Worker’s Compensation Insurance? — If you have more than 5 employees, and your business is based anywhere other than Texas, you don’t have a choice. Refusing to purchase this insurance could mean fines, having your business shut down, huge lawsuits and even jail time.
Remember, although Worker’s Compensation Insurance can be costly for some businesses and may never be used, it is far better to be prepared than to risk a injury lawsuit that could bankrupt your company.
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