If you are a business owner with one or more employees, you are legally required to carry worker’s compensation insurance. This law applies to all states except Texas, with some states’ specifications about the minimum number of employees varying.
But aside from complying with the law, carrying workers’ compensation insurance actually protects your business from financial risk. You see, hiring employees is a great responsibility, with their safety while working for you falling on your shoulder.
By getting coverage, you transfer the financial burden of accidents and injuries while at work from yourself to the insurance company. That said, here are a couple of things you probably want to know when looking for or getting Cerity workers’ comp insurance:
What Workers’ Compensation Covers
While workers’ compensation insurance covers your businesses financially, against numerous situations, it does not protect you from everything.
Generally, it pays for medical costs, lost wages, and other rehabilitation costs to workers injured or falling ill in the course and as a result of doing their job. If an employee succumbs to injuries from an accident on the job, it will also pay damages to his/ her family.
However, workers’ compensation does not cover employee lawsuits against you for injuries. In some states, insurance won’t cover injuries or illnesses resulting from employer negligence.
If you want to protect yourself and your business against such liability claims, you will need to take an employer’s liability coverage.
Coverages Differ and Will Depend on Your Business Needs
There isn’t just one type of workers’ compensation insurance. Different insurance providers offer different policies and rates. So, it’s always prudent to compare various offerings to figure out what is best for your business. There are insurance comparison websites out there that can make your job easier.
Generally, the coverage you need for your business will depend on the number of employees you have on your payroll, your industry and the risk exposure, and your business’ history with regard to workplace accidents.
If you are in a high-risk industry such as construction or oil mining, expect to pay higher insurance premiums.
How Workers’ Comp Premiums Are Calculated
As the employer, you are solely responsible for paying workers’ compensation insurance. Your employees are not required by any law to help with the expenses. To purchase a policy, you will pay what’s known as a premium, and the specific figure is calculated based on your location, type of work, payroll size and claims history.
Once the policy period has lapsed, your provider will re-evaluate your business risk and worker composition and, depending on the findings, refund you or ask you to pay an additional premium.
That said, rates vary depending on the state, with as low as $0.41 per $100 payroll in the District of Columbia to as high as $1.78 per $100 payroll in Wyoming.
What You Need When Applying for Workers’ Compensation
Different states have different requirements when it comes to getting workers’ compensation. Depending on where you are, you can get workers’ compensation through state-funded programs or private insurance providers.
To get a quote, you will generally need to provide your:
- Business name and description
- Social security and Federal employer identification number
- Type of business, i.e., sole proprietorship, partnership, LLC, or corporation
- Desired coverage commencement date
- Business address and number of branches
- Total employees
- Annual payroll
- Previous workers’ compensation claims history
- Employee class codes
The list may be more expansive, depending on the insurance provider.
Filing a Workers’ Compensation Claim
If one of your employees is injured at work, report the incident to your insurance provider immediately. Unfortunately, many employers brush off seemingly minor injuries that could later on become bigger issues. So, even if it seems minor, report it and let your insurance provider do their own analysis.
Once you file an injury report, an investigation follows to validate the claim. An insurance investigator will examine the documentation regarding the injury and witness statements. In some cases, a drug test may be needed.
As an employer, your job will be to cooperate with your insurance provider whenever needed.
Conclusion: Workers’ Compensation is Not Just Necessary, But Good for Business
Running a business comes with great risk. And the greatest of them comes with employees. If an employee is injured on the job, your business can suffer enormous financial loss. So, it is always best to get workers’ compensation, regardless of whether the law requires it.
