You’ve heard the term before, but it’s not something you’re that well-versed in, particularly if you’ve spent most of your life as an employee. Indeed, it’s only when you start a business that you seem to encounter workers’ compensation insurance more and more. It can confuse you, but it’s a topic that needs to be understood.
What is workers’ comp? Do you need it? How does it work?
All three of these questions shall be answered by the time you finish reading this post, and you will also be full of additional information that ensures you know everything you must know about workers’ compensation insurance.
What is workers’ compensation?
Workers’ comp is an insurance product that’s designed to protect workers. The whole idea comes from employees that might get injured or catch an illness as a result of their job. For instance, a lot of construction workers used to get injured all the time before stricter safety measures were put in place, not to mention the illnesses gained from being around harmful substances – like asbestos. Before this existed, any workers that got injured or sick wouldn’t receive any support from their employers. It was also harder for them to claim any compensation legally. Nowadays, a construction worker can easily find a construction injury attorney to gain compensation and file a worker’s comp claim.
It’s not just the construction industry where this is relevant – it is in place across all sectors. The basic concept is that employees can now make claims to get financial compensation if they are injured or made sick at work. It can help workers get money to cover medical bills, lost wages, or time off sick.
How much does workers’ compensation insurance cost?
Honestly, it’s impossible to give you even a ballpark figure here. The fact is that workers’ comp can vary so dramatically in its costs depending on what state you’re in, the type of work you do, the coverage from the insurance, and so on.
However, we can say that jobs with high-risk working conditions will have more expensive workers’ compensation insurance than ones with low-risk working conditions. If you work in an office, your premium will be considerably lower than a construction or manufacturing business that both work in risky conditions where accidents are more likely to happen.
Furthermore, you can affect the price of your premium by making your workplace as safe as can be. Insurance providers usually carry out health & safety checks to see how many risks are present on your premises. If your workplace is very safe, your premium will reduce. The more claims you have on your insurance, the higher the costs will go in future years.
Who needs workers’ compensation?
In the US, every business in almost every state must have some form of workers’ compensation insurance in place. It is compulsory for all employers, apart from those in Texas. As of 2018, the workers’ comp laws changed in that state, meaning it is no longer a legal requirement to have it.
It’s a good idea to check your state’s regulations regarding this insurance, so you know exactly what’s required. If you don’t have worker’s comp, and you are legally required to, you can face fines or be forced to make any compensation payments out of your own pocket. As you can imagine, this could be devastating for a small business if it were to happen.
Who is protected by workers’ compensation insurance?
We’ve already mentioned that employees are protected by this insurance product. They know that, if they get injured at work, there are legal routes they can go down. They’re aware that they are entitled to compensation if they need it, which eases the financial stress in situations where an employee is injured or off sick because of something that happened at work.
However, workers’ compensation also protects the employer. Yes, you have to pay the premium, but it means your provider will cover the compensation costs if any claims are made. In essence, you can save money if accidents happen at work and employees are claiming worker’s compensation from you. Without the right coverage, you will pay it all out of your own bank balance.
To sum it all up, workers’ compensation is a compulsory insurance product in most states within the US. It exists to protect both the employer and employees, offering compensation through insurance providers if someone is injured or made sick from their time at work. If you are starting a business, you need to find a workers’ compensation provider before you hire anyone.