Workers’ Compensation Insurance: A Guide

By | December 1, 2022

Occupational hazards include accidents that happen on the job. Even when an employer has strict safety regulations and training programs, accidents sometimes occur on the job site. Workers' compensation comes into play when an injury happens at your place of business. Continue reading to learn more about workers' compensation insurance and how it works.

What is Workers' Compensation Insurance?

Workers' compensation insurance covers a percentage of lost income, medical bills, disability, and death benefits in the event of a workplace accident and protects employers from any related lawsuits.

Why Does Your Company Need Workers Compensation Insurance?

You must have workers' compensation coverage if you operate a business and hire employees. Just as your company has commercial property insurance to cover the costs of theft or fire or a commercial auto insurance policy to cover the costs of a vehicle collision, it must have a workers' compensation policy to cover the costs of workplace injuries. Workers' compensation insurance, in a nutshell, protects companies against the risk of workplace injuries and covers the costs and compensations connected with those accidents.

A company should obtain workers' compensation insurance for the following reasons:

1)   It is the Law in Most States

It is enforceable by a law that is expected to be followed in most states.

2)   It Assists a Company in Avoiding Major Financial Harm

The sums an employer could be forced to pay for potentially unlimited tort liability for workplace injuries are mind-boggling. An uninsured employer could go bankrupt if a death claim exceeds millions of dollars.

3)   It Provides Employees with a Safety Net in the Event of a Tragedy

According to the U.S. Bureau of Labor Statistics, businesses in the private sector reported 2.8 million nonfatal occupational injuries and illnesses in 2020. Workers' compensation insurance benefits employees as well as companies in terms of risk management.

4)   It Shields a Company from Legal and Criminal Sanctions

A company may face substantial consequences if it fails to have workers' compensation insurance. These differ by state and can include fines of up to $100,000 and up to seven years in prison.

5)   It is the Right Thing to Do

Workers' compensation systems originated as one of the great political compromises of the Progressive Era, in which injured workers gave up their right to sue their employers for personal injury damages in exchange for less generous but more certain payments. Workers' compensation insurance binds companies to The Grand Bargain's conditions.

How Does Workers' Compensation Insurance Work?

Workers' compensation is a two-way street; in the event of an incident, both the employee and the employer agree to specific criteria. The employer agrees to pay for medical bills, missed earnings, and possibly additional benefits incurred as a result of work-related accidents and illnesses. However, in order to receive these benefits, the employee must agree to limitations on their ability to sue the company.

To get workers' compensation benefits, the injured or ill employee must file a workers' compensation claim with their employer.

Both parties complete their parts of the claim, which is subsequently sent to the insurance company for review.

What May Be Covered by Workers' Compensation?

  • Medical help
  • Disability and wage loss
  • Survivor benefits
  • Physical therapy and rehabilitation

Workers' compensation coverage varies for every firm, as it does for all business insurance types. It is also determined by the seriousness of the job accident or illness. Workers' compensation insurance often contains the following:

1)   Medical Care

If an employee is injured on the job, workers' compensation will consider the immediate costs of medical care and any following operations, doctor's appointments, and medical equipment.

2)   Disability and Wage Loss

Workers' compensation insurance pays lost wages or disability payments if an employee cannot work due to an on-the-job injury or illness.

3)   Survivor Benefits

If an employee dies due to a working accident or injury, workers' compensation may compensate their family for missed wages and burial expenses.

4)   Physical Therapy and Rehabilitation

Workers' compensation insurance may pay for physical therapy or rehabilitation if a work-related injury necessitates it.

What are the Guidelines Regarding Workers' Compensation?

Five basic qualifying requirements must be met for the payment of workers' compensation.

  • First, the person claiming compensation for an injury must be classified as an employee.
  • Second, the injured party's employer must have workers' compensation insurance.
  • Third, the employee must have had a work-related injury or sickness.
  • Fourth, state reporting and filing deadlines for workers' compensation claims must be met.
  • Finally, the injured employee must keep all of his or her medical appointments, examinations, and treatments.

 How Much Does Workers' Compensation Cost?

Workers' compensation insurance costs vary by business and state, as with other business insurance. The charge is also determined by the nature of your company's job. For example, businesses with higher occupational hazards and risk of accidents-such as a delivery service-are likely to pay more premiums than firms with a lower risk of accidents, such as a content marketing agency. Other considerations include payroll size, additional workplace activities, and claims history.

Do I Require Workers' Compensation Insurance?

Workers' compensation insurance is an excellent idea to protect your business, and depending on your state, you'll probably need it if you have one or more employees.

It should be noted that most states require some workers' compensation insurance, with particular criteria imposed the minute a company hires its first employee. Cell Brokerage Risk Management Group employs insurance professionals who are industry experts in their respective fields. It means that professionals who understand you, your family, and your business meet your specific insurance requirements. Please visit our website to learn more about how we can assist you.

Talk to an Insurance Pro

    Why Is Life Insurance Important for the Self-Employed?

    By Cell Brokerage | February 1, 2023

    You may not realize it, but life insurance is an important part of being self-employed. Without it, your death could result in more than just the emotional toll it will take on those left behind. Here are a few reasons you should consider buying a policy.

    Read More

    Top Tips to Protect Your Business from Common Liability Risks

    By Cell Brokerage | January 15, 2023

    Running a business comes with its own risks. Read on to learn how you can protect your business from the liabilities that may arise from such risks.

    Read More

    4 Examples of Commercial Risk

    By Cell Brokerage | January 1, 2023

    When running a business, risk is one of those words that you simply cannot avoid. Not understanding the risk you face in your business could be preventing you from acquiring that sizable contract or that ideal client. There are all sorts of risks that businesses take on and understanding them is vital for any business owner. In this article, we’ll look at some of the most typical business risks and how you can protect your company from them.

    Read More

    Liability Insurance: What It Is and How It Works?

    By Cell Brokerage | December 15, 2022

    Choosing an appropriate insurance policy for your business from the sea of options available can be quite overwhelming. Identifying the significant risks your company might face and deciding on the right policies requires diligence. Taking care of liabilities and associated risks is also an essential part of protecting your business. Liability is a term that means duty, obligation, or responsibility. It grows with the business, and depending on the type of business; you will need different insurance policies.

    Read More

    How Often Should I Update My Business Insurance Coverage?

    By Cell Brokerage | November 15, 2022

    Business insurance coverage should change as your business evolves. No matter if your company is moving to a new location, experiencing a burst of growth, or any significant change, you should evaluate your insurance coverage. As needs change, so do the risks. Make a plan to review your business insurance policy at least once a year and every time there’s a significant change. Taking a proactive approach like this can help ensure you have the coverage you need to protect your company in the event of a disaster.

    Read More

    Why You Should Use An Insurance Broker

    By Cell Brokerage | November 1, 2022

    A significant challenge when shopping for business insurance is making sense of various coverage options and products. Knowing precisely what will be best for your situation can be overwhelming. Working with an experienced and qualified insurance broker can reduce the confusion and help you make the right policy choice.

    Read More

    I Started My Own Business. What Insurance Do I Need?

    By Cell Brokerage | October 18, 2022

    Congratulations on starting your business! Whether in the professional services or consulting industries, retail, manufacturing, or construction, companies need business insurance. And having the right coverage can help protect you from expensive damage and lawsuits. As a business owner, you have plenty of options.

    Read More

    Protecting Your Business from Insurance Scams

    By Cell Brokerage | October 1, 2022

    No matter the size, businesses must be prepared for illegal and frivolous insurance claims from scammers. And it can be hard to identify who may be running an insurance scam, hoping to get some of your hard-earned money or disrupt your business. The person may be an everyday contractor, the friendly voice on the phone, or the sender of an email in your inbox. In disguise, the person is a scammer, hacker, or fraudster.

    Read More

    Incorporating Insurance Into Your Risk Management Strategy

    By Cell Brokerage | September 15, 2022

    Risk management is a broad topic that involves taking steps to minimize and control the threats businesses face. Learn how to identify your risks and what you can do for prevention.

    Read More

    Do I Need Business Interruption Insurance?

    By Cell Brokerage | September 1, 2022

    Wondering if business interruption insurance is right for you? Find out the coverage benefits to help keep your company running after a major disaster

    Read More