As a small business owner, you have to make numerous decisions on a daily basis. Not only do you have to address day-to-day operations challenges, but you need to protect and guide your business overall, such as expansion and insurance choices. Workers’ compensation insurance is the protection your business needs as you start hiring employees because it protects you and your employees if an injury occurs. These are reasons small businesses should purchase workers’ compensation insurance.
Protects Your Employees
Your employees are some of your greatest business assets. These assets need to feel as if your company values them, and one great way to show that you care is through making sure they are protected.
In 2014, the Bureau of Labor Statistics reported 3 million injuries or illnesses caused by workplace accidents, and more than 300,000 employees slipped or fell while on the job in 2016. Although you are required by law to provide a safe working environment, accidents can happen, and some industries, such as manufacturing, energy, and construction, have inherent risks.
Work-related injuries may include falls and trips, but they may also include loss or injuries to a limb and repetitive motion diseases. In the event of an accident, workers’ compensation insurance steps in and pays for the employee’s injury-related costs, funeral costs, and death benefits. Your employees will rest easy when they know their expenses will be paid even if they can’t work.
Requires Post-Accident Investigations
When a workers’ compensation claim is filed, an investigation is immediately started by the insurance company. This investigation will determine whether the employee was in fact hurt on the job and what type of compensation should be awarded.
This type of insurance does not cover injuries that are self-inflicted, caused by inebriation, or are due to violations of company policy. Independent contractors are also not covered. Finally, if employees are injured when they are not on the clock or have been fired or laid off, these employees are not covered.
To start an investigation, an employer must immediately notify the insurance company when an employee is injured. The insurance company will also typically require a detailed statement from the employee and any witnesses about what happened and why. In addition, medical assessments and bills are collected. The employee may also be tested for drugs and alcohol.
May Be Required by Law
Any workers comp lawyer Las Vegas will tell you that each state has different laws regarding workers’ compensation. Texas is the only state that does not require employers to purchase this insurance. However, in other states, you are required to purchase workers’ compensation the minute you hire your first, second, third, etc. employees.
States set the amount of insurance that must be purchased. They also determine what injuries or illnesses are evaluated and covered. They set the medical care requirements and employee benefits. For example, the state may limit chiropractic care to control costs.
Some states require that you purchase your insurance from a state-run agency, while others require that you purchase through an independent insurance company. They may determine when a claim must be filed. Dispute resolutions, such as when a claim is denied, are also set by the states. States can also penalize businesses and insurance companies if a delay in payment occurs.
If you have employees in more than one state, you need to check with each state to determine their requirements. However, if your employees are out of state on a company trip and are injured, the insurance still covers them.
Shields Your Company
Employee benefits costs are ever-increasing, and you may be tempted to limit benefits to save money. However, a strong workers’ compensation policy can also protect your business. If an employee is hurt while working for you, whether they are on your company property or not, you are responsible for the injury. These injuries include illnesses that the employee contracts because they work in your company. For example, if an employee contracts lung disease due to exposure to chemicals they used at work, you are liable. You may even be responsible for chronic back pain if employees overuse or misuse their backs at work. You would be responsible for any medical treatment, lost wages, rehabilitation or other expenses incurred by the employee due to the injury.
However, if you have adequate coverage, you will not have to pay your employees’ bills and lost wages. This insurance also pays disability payments of up to two-thirds of their pay while they can’t work. Retraining may also be paid for if employees cannot return to their jobs. If death occurs, your insurance will pay funeral costs, but it may also pay death benefits to the employee’s family.
In addition, many workers’ compensation policies protect employers from lawsuits. For example, an employee could file a negligence lawsuit to try to recover damages that will pay for additional treatments or pain and suffering. This insurance pays for any attorney’s fees and court costs you may incur. If the court finds in favor of the claimant, your insurance will also pay the settlement or judgment amount to the opposing party. This is because most workers’ compensation insurance policies also include liability insurance. However, some states require that businesses purchase these policies separately.
Risks of No Insurance
If you choose not to purchase workers’ compensation insurance, you will have to pay fines, up to $2,500, in most states. In fact, many states consider this a criminal offense, and you may be required to serve jail time if you intentionally refuse to get insurance and your charge becomes a felony.
You may also experience lawsuits from employees who are injured at work. The Department of Labor found that every year, businesses pay more than $170 billion in occupational injury expenses. This could cost you into the millions if any of your employees became permanently disabled or required extensive medical care.
Employee morale also suffers when your employees don’t feel safe. Then, your turnover increases. Replacing employees who leave because they don’t feel protected can cost up to $15,000 per employee, and this doesn’t account for lowered production and training costs.
If you own a small business, you can benefit significantly from purchasing workers’ compensation insurance for your employees. Not only is it required by law, but it will protect you and your employees.
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