Besides regular insurance, workers’ compensation may have more benefits than you can imagine. Below, we examine what workers’ compensation insurance involves and why you should have a worker’s comp plan for your employees.
What Is Workers Compensation Insurance?
Workers’ compensation, or workers comp, is insurance that covers workers in cash benefits and/or medical care when they become ill or get injured as a direct result of their work. Only employers pay for this coverage and employees don’t contribute. Usually, every workers’ compensation policy has two parts:
- Workers Compensation
- Employers’ Liability
In the first part, the insurer details the contract to pay whatever the country or state-required compensation may be. Workers comp policies don’t usually have a ceiling or limit amount. In the second part, the policy provides coverage for employer liability. This is when an employee sues the employer for work-related bodily illness or injury that isn’t subject to the country or state statutory benefits. This part has a limit to what the insurer can cover.
Why Do You Need Workers’ Compensation Insurance?
Having proper workers’ compensation insurance is more than just a business cost. It’s part of a comprehensive business and workplace safety program and strategic investment for the business and its employees – the most important asset. Workers comp insurance serves three key purposes:
1. A Legal Requirement
First, workers’ compensation is a legal requirement for employers unless you’re exempt. It legally obliged employers to take reasonable care of workers and assure them of workplace safety. The possible exception scenarios include things like:
- Being a sole trader
- Having less than three employees
- Not having a large turnover
You can check with your state to find your exemption state or consult with insurance or finance system providers like Pherrus Financial for detailed information. By having workers’ compensation, you’ll be operating your business on the right side of the law.
Nevertheless, accidents happen and workers comp provides coverage when they do. As a legal requirement, not having workers’ compensation has consequences, such as a fine and lack of access to the benefits associated with having it. In some cases, an employer may be sentenced to a jail term.
2. Workers Care
Workers’ compensation coverage is a company/employer’s guarantee that injured workers will get important coverages like:
- Medical care when injured at work. It’s like group workplace health insurance
- Ongoing care costs and rehabilitation services
- Lost wages. They lose compensation for income (a portion) while unable to return to work, which affects their personal finances
- Funeral expenses
Why’s this important?
Even the safest workplace can experience incidents/accidents that result in employee illness or injury. Injuries can affect employees’ income or render them unable to earn.
So, workers’ compensation is a safety net for the employee.
Furthermore, when an employer is covered under workers comp, employees receive benefits regardless of whose fault the accident was. If a worker dies at work, workers comp also provides death benefits to the worker’s dependents.
3. Business Protection
A workers’ comp protects employers/companies from three key costs:
- To avoid the real cost of an employee’s lost wages and medical expenses following a workplace-related illness or injury
- Lawsuits by employees and workers injured or those who get ill during working
- Fines from law authorities because of lack of workers’ compensation coverage
Without workers’ compensation coverage, these costs – medical expenses, lawsuits, and fines – can cause irreparable financial harm to the business.
Furthermore, a supportive insurer can provide access to lose control services that may help keep premiums low and reduce costly claims. Proactive management and professional claims can also help employees recover quickly and return to work faster after a work-related injury or illness. This can also save business costs related to reduced productivity, hiring temporary workers, or training new employees.
Who Does Workers’ Compensation Cover?
Knowing who qualifies for workers’ comp in your company and state is essential.
Several factors determine which employees are covered under workers’ compensation insurance, such as:
- Size of your business
- Specific roles
- Types of employees
The requirements of which employees benefit from workers’ compensation may vary from state to state. But most states require workers’ comp for full-time employees, while others have laws for interns, temporary workers, and contractors.
Some states’ laws don’t require workers’ comp for the following types of workers:
- Casual workers
- Insurance agents
- Farmhands
- Real estate agents
- Business owners and partners
It’s essential to check with your state for the types of workers covered and the level of coverage you need.
Does Workers’ Compensation Insurance Cover Covid-19?
Whether or not workers comp covers Covid-19 depends on several things, including your state and occupation. In some states and jobs, you may be eligible for workers comp for Covid-19 if you or your workers are exposed at the workplace.
For instance, in the U.S.
- 17 states and Puerto Rico extended their worker’s comp coverage to include Covid-19 infection as a work-related illness.
- Other states have enacted legislation allowing workers comp coverage for certain Covid-19 categories of workers, such as essential workers like grocery store employees.
Endnote
It’s important to get workers’ compensation insurance for your business. It’s a legal requirement, a safety net for your employees, and protection for your business. It can also help save more costs, like hiring, onboarding, and training new employees.
