What You Need to Know About Providing Workers' Compensation Coverage

Workers’ compensation provides coverage to your employees if they sustain injuries or become ill on the job. As an employer, it is your responsibility to carry a workers’ compensation policy, not only to protect your employees but to protect yourself and your business. What should you know about providing adequate coverage for your employees? Take a look below for insight into insurance requirements, coverage details and potential costs for your business.

It’s Required

Carrying workers’ compensation coverage is required in nearly every state. The employee threshold for mandatory coverage depends on your industry, but even if you only have one employee working a desk job, you still need to protect yourself from liability. While workers’ compensation isn’t required for each employee your business pays – contactors, volunteers and domestic workers usually aren’t covered – it’s a necessity for full- and part-time W2 employees. Even if your state has looser regulations surrounding workers’ comp coverage, it’s never a good idea to go without. According to this source, in 2017, private industry employees reported nearly 2.8 million nonfatal workplace injuries and illnesses. You never know what might happen on the job and you certainly don’t want to be held financially responsible when things go awry.

It Doesn’t Just Cover Injuries

Many business owners erroneously believe that workers’ compensation only covers employee injuries sustained in a place of employment. However, this type of insurance also covers illnesses and physical injuries that arise as a result of performing job-related duties. If an employee sustains an injury while running a work-related errand or suffers physical harm while at an employer-sponsored social gathering, they’re covered under your workers’ compensation insurance. Likewise, if any employee develops a health condition associated with the duties of their job or exposure to workplace conditions, workers’ compensation kicks in to provide coverage.

The Cost to Employers Varies

According to this source, as a business owner, your workers’ compensation costs vary based on several factors. Premiums can range from just a few hundred dollars to several thousand dollars, depending on your business’s characteristics. Here’s what helps your insurance company calculate your premium: 

  • Your location – Workers’ compensation is regulated on a state-by-state basis. You must comply with the regulations of the state where your employees perform their primary job duties. 
  • The type of business you own – Insurance premiums are calculated based on the type of work being performed in the business. If you own a manufacturing business where employees are more prone to injury, your premium will be higher than if you own a call center.
  • The number of employees on your payroll – Premiums also depend on the number of full- and part-time workers who require coverage. 
  • Your history – If your business has a history of filing workers’ compensation claims, chances are your premium will be higher. 

Insurance companies calculate the perceived safety of your workplace based on your claim’s history, so if you want the lowest possible premium, implement safe work practices.

Having adequate workers’ compensation policy protects you and your business, both financially and legally. Plus, it gives your employees peace of mind that allows them to be more productive and efficient with their time. The last thing you want is to be held personally liable for an unexpected employee injury or illness, so make sure you have the appropriate insurance coverage.

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