January 22, 2020
Blog Workers’ compensation policies can be difficult to understand, while still holding great importance. Workers’ compensation policies improve employee satisfaction and expected in most states.
Having a good understanding of workers’ compensation policies is a necessity.
There is a lot to know when it comes to workers’ compensation policies. Costs, mandates, and policy specifics are a few of the important aspects to know.
Picking the best policy is important for business owners. There are different types of policies and knowing which one is best for you is vital.
What Are Workers’ Compensation Policies?
When you own a business, you are responsible for the safety of your employees.
A workers’ compensation policy ensures the workers if they get hurt while working. Workers’ compensation policies will kick in regardless of fault. Your policy will take care of any of the employee’s care needs.
The establishment of a workers’ compensation policy will also limit employee litigation. Workers’ compensation policies are state-mandated. Each state sets its own mandates so check your state requirements.
Most states dictate you to have workers’ compensation. Not having it could have serious consequences in these states.
What Do Workers’ Compensation Policies Cover?
Each policy is different but for the most part workers compensation helps employees. Benefits can cover medical expenses, lost wages, rehabilitation, and even funeral costs.
These benefits are necessary for your employees and will protect you if there is an accident.
Each policy will have a list of covered services for your employees. You will want to review this list and make sure it covers the services you want. The more services covered the more your premiums may be.
So, reviewing coverage and reducing services that are not required can save money.
Workers’ Compensation Policies Vs. General Liability Insurance
These types of policies are similar but cover different things. Workers’ compensation covers your employees if they have an accident. General Liability insurance is for third parties like customers.
If there is an accident at your place of business, you will need general liability to cover the expenses. General liability can protect you against claims of injury or damage to property.
It also covers your business from slander, libel, trademark infringement, and advertising injury.
As you can see both of these insurance policies are a necessity for a business. Especially if you are a small or new business. Having a legal claim for damages can ruin a business if you do not have insurance. So even though these policies can be expensive they will save you money if you need to use them.
How are Costs Calculated?
There are many factors to consider when calculating the cost of workers’ compensation. The state requirements, size of the business, number of employees, and more. Here are a few of the things to consider when calculating costs:
State Requirements
The best way to understand how state requirements will affect your costs is to do some research. There may be specific services you need to include in your coverage. Some states allow small businesses to operate without coverage. These factors will affect your final insurance costs.
Number of Employees
In general, the larger your staff the more your coverage will cost. Some services include paying your employees lost wages. The insurance company will factor in the number of your employees and your payroll. The more potential they may have to pay out the higher your costs may be.
Risk Potential
The type of work you do at your business will determine costs as well. Jobs that have a higher risk of injury will carry a higher cost. If the insurance company has a high potential to have to pay a claim, then your premiums will be higher.
What is an Assigned Risk Plan or Pool?
States have established assigned risk plans or pools to ensure businesses meet requirements. Businesses that considered high risk or have many claims can get coverage. Through these state programs businesses can the coverage they need.
Even if traditional insurance companies will not cover them. If you are having problems finding workers’ compensation policies check with your state.
What is a Second Injury Fund?
Many times, after an employee has become disabled, they decide to return to work. It can be difficult to find work because no employer wants to take on the risks. A second injury fund is set up by the state. This applies to a disabled worker who receives a second injury.
The state will cover part of the expenses in exchange for giving work to disabled citizens.
This type of policy could be a way to provide jobs to individuals having a hard time finding work and cut costs. Since portions of the workers compensation the responsibility of the state. This can reduce costs to the employer.
How to Reduce Costs for Workers’ Compensation Policies
There are things you can do to reduce costs for workers’ compensation policies. When you are looking for a policy make sure to explore all your options. Be sure to manage your risks and limit taking on high-risk employees. Keep the workplace safe and reduce accidents with proper training.
Look for saving opportunities and take advantage of savings programs. Review the premiums once you receive them and make sure they are accurate. Shop around and look for the best deals. Shopping the market can help you get a better deal.
One insurance agency may not be able to offer you a good deal, but another might. Workers’ compensation policies should protect your employees and be cost-effective for your business.
If you haven’t found the right workers’ compensation solution for your business, contact us today for more information on how we can help.
