The goal of every company is to accelerate and maximize profit by discovering new possibilities to scale down insurance premium and checkmate unforeseen volatility in premium.
This guide is written with this end in mind to assist you in understanding the fundamentals of workers compensation insurance and what you need to consider in advance.
I hope you would have been empowered with the required information to aid your buying decision after reading this guide.
I also believe you would have gained the understanding of transferable risk to other parties through the worker's compensation insurance (policy).
Now imagine this scenario!
One of your productive employees breaks a leg after taking a tumble down the stairs during work. Or another worker broke his wrist while attempting to lift heavy equipment while working.
These incidents above are bound to happen. They are everyday occurrences in the work environment and can represent an unpleasant and costly factor in your business.
'Workers comp' which is the other name for Worker's compensation ensures your business is protected from unforeseen injury incidents emanating from and during the period of employment.
Every company with employees has no other option but to deal with an issue relating to worker's compensation.
A recent study revealed that employers are more bothered about safety in the workplace than any other incident or risk.
As an employer, the safety and security of your employees is your responsibility. You may be held responsible in cases of accidents, injury, etc.
This is what makes the worker’s compensation insurance important. The primary benefits that some employers already know a worker's compensation offer but they are naïve of the extended benefits that come with it.
Defining Worker’s Compensation Insurance
Workers' compensation is insurance paid by companies for the provision of certain benefits to employees on occasions of illness or injury on the job.
This program provides employees with benefits and medical care, and also leave employers with the confidence that they won’t be sued by the employee.
Like other types of insurance, companies pay into workers' compensation funds at both federal and state levels.
Then, the workers who become ill or injured while on the job benefit. Eventualities like pain, negligence and suffering claims are excluded from workers' compensation.
Why Worker's Compensation Insurance is essential for your business?
Your business needs worker's compensation insurance as your best safety strategies may sometimes fail and illnesses and injuries that occur in the workplace or caused by work are inevitable.
No one expects any of their workers to be harmed at work, but it is unavoidable and cannot be ignored.
Accidents can occur anywhere- even during training on health and safety for the workplace, and even in low-risk work environments.
In a situation where any of your employees is injured, your insurance covers the legal expenses. Also, the medical cost will also be included, including compensation for lost work, and other rehabilitation services.
Should it be a case of fatal accidents, the deceased family members will receive funeral expenses.
There are various points to note for Worker’s Compensation.
Workers' compensation is required for all employers.
Workers' compensation is indeed required for every employer, but level and type of coverage differs from state to state. They vary in:
Some Employers self-insure for workers' compensation, based on their policy meeting up to the minimum of state regulation. Most companies prefer belonging to their state's workers' compensation program.
Worker's compensation covers long-term illnesses, injuries, and incidents
Workers' compensation benefit payments provide for workers by replacing their wages, providing vocational rehabilitation programs and paying for medical treatments so they can get back to work. It also covers for Death benefits.
Some workplace injuries can occur from time to time or on a long-term basis; for example, repetitive stress injuries like carpal tunnel.
Employers pay Workers' compensation to a state fund.
As earlier mentioned, worker's compensation programs are administered on a state-by-state basis.
Separate worker's compensation programs for specific groups are administered by the federal government. This includes federal employees, long-shore employees, and coal miners.
Basically, the cost of workers' compensation benefits is dependent on the total payroll and the severity of illnesses and injuries that workers experience.
For instance, a manufacturing company has higher workers' compensation costs than professional practice.
Employees Can Sue an Employer For Injuries In The Workplace
Some circumstances occur that warrants an employee sue an employer, although Worker's compensation payments preclude employee lawsuits against employers.
Such lawsuits could be for various reasons, including:
Certain Workplace Injuries Are Beyond The Scope of Worker's Compensation.
Some workplace injuries are beyond the range of worker's compensation. Such injuries or illness will not be compensated by worker's compensation. Examples include:
Filling For An Employee Compensation Claim should not be discriminated.
Federal laws and state legislation prohibit employers from firing, retaliating against, or otherwise discriminating against employees who file worker's compensation claims.
Employee compensation fraud can result in high fines and penalties.
The purpose of Workers' compensation fraud is to reduce premiums. Common examples of workers' compensation fraud include:
Employee compensation fraud can also be committed by claiming an injury falsely. Sometimes workers contribute to the fraud by claiming fees for non-existent medical treatments or services.
Let’s go through the benefits of workers compensation insurance.
The benefit of Workers Compensation Insurance
As a business owner, it is your responsibility to ensure security and safety at the workplace.
You will even be held responsible for any injury at work. This is the more reason worker's compensation insurance policy is very important.
Most employers know about the fundamental benefits offered by worker's compensation coverage, only a few know about its extended advantages provided by it.
Legal Liability Coverage
At the inception of workers’ compensation insurance, its purpose was to help as a bargaining aid between employers and employees. Back then, the cost of legal fees involving employees who got injured on the job was covered by employers.
Recently, it is discovered that legal cost can be a huge responsibility for employers. Worker’s compensation insurance comes in handy and provides legal liability coverage.
Vocational Rehabilitation Expenses
Workers’ compensation covers for training expenses. Worker’s compensation covers for an injured employee, who as a result of the injury can no longer continue with the current job and will need training for a new job.
The cost of the training for future employment is included in a worker’s compensation plan under vocational rehabilitation expense.
Occupational Illnesses and Conditions
Some jobs are prone to result in certain sicknesses. For instance, respiratory illness such as asthma can be directly linked to an employee’s work.
The quality of life of an employee can be significantly affected by Occupational illnesses and conditions.
Workers’ compensation can help employees both manage their condition – been productive at work and also save money on medical bills.
Lost Wages Compensation
Workers’ compensation policy can cover the cost of an employee’s disability, either partial or total.
Workers’ compensation insurance coverage can provide half of the employee's usual income while the employee is temporarily disabled.
Special Add-on Covers
Employers have the choice of including add-on coverage to their Workers’ compensation.
Business owners can include disability coverage for sub-contractors.
This also entails getting coverage for unusual circumstances such as disability or injury resulting from a terrorist attack that occurs during work hours.
Comprehensive Inclusion involves policies from the state and Federal legislation.
Employees policies cover current employees from the beginning of the policy.
The legislation includes the Fatal Disability Act, 1855 and the Workmen Compensation Act, 1923.
Workers’ compensation insurance, as essential protection for any business, has tons of benefits for both employer and employees.
Why do you need workers’ compensation insurance?
If the worker’s compensation insurance is required in your state, then you have to comply.
Not carrying out this insurance directive or not meeting the state regulations can leave an employer exposed to both paying these benefits out of pocket and also paying penalties levied by the state.
Those required to have a workers’ compensation policy?
Although State laws differ, generally, an employer’s responsibility to provide coverage may depend on some factors such as some employees type of business.
For sole proprietors, a workers’ compensation policy may be optional until you have employees who are not also owners.
The immediate family members of the employer who work for the business may not require coverage In some states.
Where To Get Workers’ Compensation Insurance?
Some cases require that workers’ compensation is purchased differently from your general business owners’ insurance policy.
This is however subject to the state. Each state determines if workers’ compensation is provided by either private insurance companies, the state or both.
For a state that allows coverage by private insurance companies, check out for a top-rated provider who has working knowledge of workers’ compensation insurance, experience in handling claims, and the actual coverage needed for your business.
How are premiums set for workers’ compensation?
Workers’ compensation insurance premiums are calculated by industry classification code; location (risk-prone areas lead to higher premiums); the claims history of the business relative to other businesses in the industry; and payroll.
Premiums for industries considered dangerous may be higher.
Cost for workers’ compensation policy
Cost of coverage varies based on business type and number of employees.
Costs including payments made under deductibles, administrative costs of claim handling, and reporting to the state and your insurer are an additional cost to the insurance premium itself.
You can manage your insurance expenses by finding a provider that has a “pay-as-you-go” billing solution.
This system bases premium charges on real-time payroll numbers which allow for paying your premium after each payroll rather than making large up-front payments and reconciling at the end of the year.
Take action to reduce workplace injuries
Providing a safe work environment can benefit both business owners and their employees. Employers can take these steps to minimize the chance of a workplace accident:
How workers’ compensation claims work
When there’s a workplace injury or occupational illness, you as an employee should immediately report the incident to the employer. Different states have various Reporting periods. You should ensure you report before the deadline allocated to your state to receive the claims.
The following steps should be taken after an injury or illness is reported:
The next question you want to ask having understood the fundamentals of workers' compensation insurance is 'What's the next step?'.
You don’t need to think too far. I will recommend you find leading expert brokers that can guide you on selecting the right and the best coverage suitable for your company.