February 19, 2020
Blog When you own a business, you must have workers’ compensation insurance. The requirements of workers’ compensation insurance can be difficult to understand and confusing; however, they can help you in the long run.
Knowing what type of insurance you need and how they are different is an important part of running a business. Keep reading to learn more about workers’ compensation insurance for your business.
What is Workers’ Compensation Insurance?
Workers’ compensation insurance will cover your employees if they have an injury while performing their job duties. This can save you from major financial hard times as your insurance will be the ones compensating them for the injury, not you.
There are three different workers’ compensation benefits.
Medical Only
This applies if your employee’s injury requires them to seek medical care. Your insurance will cover their medical expenses caused by the injury. This can include everything from medical bills to the equipment they need for their recovery.
If your employee misses work because of the injury, then your insurance will cover lost wages. This will save you from having to pay out of pocket.
Temporary Disability
Temporary disability benefits apply when the injury causes a short term disability for your worker, meaning they are unable to work for an extended period.
This benefit will cover any expenses they have for medical costs. It also provides a disability payment to your employees while they cannot work. Once they return to work, the payments stop. This benefit only applies if the employee suffered the injury while working.
The benefit also includes partial benefits if the employee returns before full recovery. If they come back early, they may have fewer hours or a different position with fewer duties.
If they are not receiving a full paycheck because of the limitations of their injury, they can get a partial disability payment to make up the difference.
Permanent Disability
If the employee’s injury makes them disabled permanently, then they can get disability payouts. This helps them mitigate the losses they have suffered based on the injury.
If the employee can’t return to the job they have but can still work in another position, they are also covered. Insurance can provide a partial permanent payout in this case.
How are Costs Calculated
The cost you pay out for workers’ compensation insurance will vary for each business.
Several factors will dictate your costs. Some of those factors include which state you’re in and how many employees you have.
State Requirements
Each state has different requirements when it comes to workers’ compensation insurance. Checking with your state will help you figure out how they can affect your costs, not complying could result in penalties.
You might have additional benefits you must carry that increase costs or you may be fortunate enough to be based in a state that does not require insurance. The only way to know is to research your state policies.
Number of Employees
If you have a large staff, then your costs will be higher compared to a small business.
Your benefits are set up to cover any lost wages. So, if your business has a large payroll the risk is higher.
Risk Potential
Each business has different risk factors. If your business is in an industry that has a high potential for injuries, then you will pay more. The insurance company will consider the potential risk to your employees. The more chance that injuries are going to happen the more your insurance will cost.
If you do have a high-risk business, look into risk plans or pools set up by the state. These are set up to help high-risk companies get coverage. The program is a way to meet your state requirements and get insurance. If you are having trouble finding an insurance company this could be a good option.
How to Reduce Costs for Workers Compensation Policies
Workers’ compensation insurance can be costly. There are some things you can do to manage and reduce your costs though. Simple things that will make a difference in your policy fees.
Make sure to reduce the risk of accidents. Make sure your employees have proper training. Make safety a high priority in the workplace. Have regular safety workshops for employees. Create solid safety guidelines and be strict in following them.
Avoid higher any employees that are high-risk. When you interview a potential employee assess their risk factors. Avoid people who could be a higher risk score for your insurance.
Some insurance companies offer savings programs. Look around for different insurance companies. You want to shop the market and find the company that suits you the best.
Research the different options and what the coverage includes. Look for any opportunities to save money on your premiums. Once you have your policy review it. You want to make sure the coverage and the costs are correct. Mistakes happen so make sure that the fees are all as discussed.
Workers’ Compensation Requirements
If you own a business, then having workers’ compensation insurance is a must. Having insurance to cover any injuries for your employees will save you money in the long run.
Your policy fees may seem expensive at the time, but the costs of injuries could ruin your business. Every business has different policy requirements, but almost all must have it. Research your requirements to make sure you have the right coverage.
If you’re still looking for the right coverage for your employees, contact us today for more information on your options.
