Does your business employ people? If you run a small business with employees, it’s vital that you have some form of workers’ compensation insurance to protect you against the huge costs a workplace injury could produce.
Below, we’ve explained everything you need to know, from how it works to why the insurance is so important.
What is Workers’ Compensation?
Workers’ compensation insurance is a form of insurance that provides financial relief for employees that are injured while working. Through the insurance, an injured employee can receive payments to cover their medical expenses resulting from a workplace injury.
Payments from work injury compensation can also make up for lost income. If an employee is injured at work and can’t perform their job while recovering, the insurance ensures they’re still able to maintain their normal standard of living.
Every state runs its own program, meaning the specific laws regarding workman’s comp can differ based on your location. However, the fundamentals of most programs are similar — to provide financial support for people injured while at work.
Why is Workers’ Compensation Insurance Important?
Whether you run a small business or a growing enterprise, it’s essential that you’re covered by some form of work injury compensation insurance.
There are several reasons to invest in workers’ comp insurance for your business. The first is the legal aspect — in many states, businesses with a certain number of employees have a legal requirement to carry workers’ comp insurance.
Without adequate insurance, your business could face fines and other penalties, affecting your ability to operate.
The second reason is the financial consequences of not carrying insurance. If one of your staff members is injured while working (even if they’re off your business location), you could face a significant payment in order to cover their medical fees and lost income.
How Much Does Workers’ Compensation Insurance Cost?
The cost of the insurance can vary depending on a range of factors, from the industry your business operates into the size of your business.
The first factor used to calculate the insurance premium is the type of business you operate. Each industry is classified using its own unique code. If your business is in a high-risk, dangerous industry, it might carry a more expensive classification code.
The second factor used to calculate your the insurance premium is the size and location of your business. If your business is located in a high-risk region, such as an area with high crime or a disaster-prone region, it could result in a higher premium.
Finally, your business’s claim history can also affect your insurance costs. If your business has a history of work injury compensation claims, this could make it more expensive to buy insurance in the long term.
Is Your Business Covered?
It’s easy to write the insurance off as “just another expense” for your business to worry about. However, the reality of work injury compensation is that being covered is essential not just from a legal perspective, but also for the financial health of your business.
Without adequate coverage, a single claim can often be enough to put your business in a tough financial situation. Many small businesses can become insolvent as a result of an unexpected, surprising workplace accident.
Luckily, keeping your business covered isn’t as hard as you’d think. As insurance specialists, we can help you find and purchase an affordable, comprehensive workers’ compensation insurance policy for your business.