Workers’ compensation, also known as “workman’s compensation” or “workers comp,” is vital for every business. The coverage caters to lost wages and medical bills for employees that get work-related illnesses or injuries.
Yet, its requirements vary from state to state.
Since every business must have workers’ comp coverage, most companies sign up without understanding how it works. This raises confusion when employees file claims and you don’t know how much the cover caters for or what to do.
Here’s a rundown of what is workers comp insurance, its benefits, and types:
What Is Workers Comp Insurance?
Worker’s compensation is a type of liability insurance that businesses are required to have under state laws. The coverage protects both the employees and business owners from unprecedented financial disasters.
Did you know that the average cost of an injury claim in the US is more than $40,000? Without insurance coverage, most employers and affected families may not meet these costs.
When your employees succumb to injuries at work, the worker’s comp insurance offers an exclusive remedy. Thus, businesses with an active cover cannot be held liable for work-related injuries. However, if it’s proven that you willingly inflicted the injury to the employee, you may be held accountable.
The cover doesn’t stop at medical bills or partial income compensation. It also provides the worker’s dependents with death benefits. Workers who need vocational rehabilitation before their health is restored and can work again are also protected by the policy.
This is regardless of who was at fault when the accident took place.
Workers Comp Laws Vary by State
Your coverage provider will walk you through state requirements for its compensation programs. All states establish their benefits and premium amounts depending on risks that businesses face and their economy.
For instance, Alaska has the highest average premiums across the US because of its several lumberjacking businesses. It’s no secret that lumberjacking poses significant risks to the workers.
In addition, the state decides who handles workers’ compensation policies, including:
- The state
• State-run agencies
• Private insurance providers
Does your state have a secondary injury fund where disabled workers can get compensation again after another injury? It’s discriminatory not to hire a potential employee because they got injured at work before.
Through the secondary injury fund, business owners find it easier to hire such people.
Should You Have a Workers Compensation Cover for Your Small Business?
It’s prudent for all businesses across most of the US states to get worker’s compensation insurance. It’s not optional.
You should get the coverage as soon as you hire your first employee.
Whether or not your state demands you have this coverage, it can protect you against significant financial losses. You don’t want to settle injury lawsuits from your business budget.
Although you have to part with a few hundred dollars a month as a premium, it’s incomparable to what you’ll use in a lawsuit settlement. Besides, noncompliance attracts hefty penalties by most states.
The Average Cost of Workers Compensation Policy
The insurance market offers different perks for businesses and manufacturers. The cost of your workers comp depends on the following factors:
- The business and industry risk factors
- Claims history
- Coverage limits
The cost of workers comp is about $40 a month and could go higher depending on the business size and risk factors. Your preferred insurance provider can customize an affordable policy that’ll safeguard your employees and your investment.
Types of Workers Compensation Insurance
it’s clear that workers comp insurance is a broad subject that may be difficult for business people to understand. Below is a breakdown of the four common types of workers’ compensation coverage:
This cover caters to all costs incurred during the treatment of work-related injuries or disabilities. It covers all copays and deductibles, yet it is not to a specific amount. This coverage caters for:
- Nursing care
• Recovery equipment, including wheelchairs
• Doctor’s appointment
• Rehabilitation and therapies
• Emergency room visits
Though the cover caters for ongoing care to people with severe injuries, it doesn’t cover alternative care. This includes acupuncture, homeopathic medicine, and naturopathic treatment.
This policy protects workers who need ongoing care after treatment. It caters to their vocational rehabilitation or physical therapy until they’re ready to resume work in a different role.
For severe cases, the policy can cover new training and required certifications.
If your employee becomes permanently disabled, they can get a Transferable Skills Analysis. The analysis is crucial in finding new roles that disabled persons can learn and use to work.
Using this cover, such affected persons can have a vocational counselor for two years and still get partial wages.
Accidents at work can leave some employees completely disabled. This is where this policy comes in handy. It caters to the following categories:
Temporary total disability: Your employee will be out of the workplace for a particular duration but can return to work fully.
Temporary partial disability: Can work without taking time off but at reduced capacity.
Permanent total disability: The employee becomes disabled entirely and cannot work again.
Permanent partial disability: The employee may return to work but will never handle their tasks as they did before the injury.
The policy provides the affected employees with partial lost wages for the entire time they are recovering. However, permanent disability cases are given disability benefits which depend on your state.
Deaths and Funeral Service
Imagine your employee dying at your workplace, and you’re in some financial struggles? What do you do for the family if you have no workers comp?
With a workers comp cover, your employee’s families are supported by the insurance in case of deaths. The benefits help cover lost income and funeral expenses. The limit to this cover also depends on your business state.
These benefits are awarded to dependents living with the deceased worker or their immediate family.
Want to Learn More About What Is Workers Comp Insurance?
Work injury-related lawsuits can force a business to shut down if you have not subscribed to workers comp insurance. If you wonder what workers comp insurance is and still need to learn more, bookmark our blog.
We’ll keep you posted on the recent developments in the workers comp insurance and update you whenever there are new changes.