You probably have many things on your mind as you begin your business. And while it is important to have an understanding of the risks that come with running a company, it’s also natural for that to not be at the
forefront of your thinking. If you start your business and don’t get workers’ compensation coverage from the start, you could put your business at risk. Don’t let this happen to you. The last thing you want is for something bad to happen to one of your employees and then find out that you do not have the necessary insurance in place. Working as an independent contractor can leave you uninsured for accidents like a sprained hand or broken wrist if they are work-related injuries. You may think that this won't happen to you, but it's safer to just get it right from the beginning.
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What Is Workers' Compensation Insurance?
Workers’ compensation insurance provides coverage for workers’ injuries and illnesses related to the job that might result in lost wages and medical care costs. It is a type of insurance that provides coverage for workers who suffer from injuries or illnesses while on the job. Workers’ compensation insurance is mandated in every state, which means that if you employ someone, you must have this insurance to cover the costs of any injuries that occur. Workers’ compensation insurance typically pays for medical bills, lost wages, retraining, and death benefits if the employee can no longer work.
Why Is It So Important for Small Businesses?
Small businesses are at a disadvantage when it comes to acquiring workers' compensation insurance. While larger companies can simply buy coverage from a commercial insurance provider, small businesses often have a harder time finding insurers that will issue them a policy. In some states, workers' compensation insurance is available only to larger employers with a certain minimum number of employees. This is because workers' compensation programs are funded through taxes paid by employers based on the number of employees they have. For this reason, some states bar smaller employers from participating in the program.
Small businesses that don't purchase workers' compensation insurance for their employees can be fined, shut down, and the owners can even be sent to jail. Employers who fail to obtain workers' compensation coverage can be penalized with fines and even have their companies shut down. Since fines can be extremely costly, some small business owners may be tempted to try to operate without coverage. But doing so can lead to even more severe consequences. In some states, workers who are injured on the job and don't receive workers' compensation benefits can pursue financial damages through civil lawsuits against their employers. If a workers' compensation claim is denied, an injured employee can file a lawsuit and seek lost wages, medical expenses, and pain and suffering.
What Does Workers’ Compensation Cover?
Workers' compensation insurance covers costs related to an employee's injury or illness by paying for medical care and time off from work. In most states, it also provides financial support for dependents of the deceased employee, including death benefits and/or survivor benefits. For example, if your workers are injured on the job and are unable to work for a period of time, the insurance company will pay their salary for that period of time. If the employee does not recover and is permanently unable to work again, the insurance company will pay a death benefit to the employee’s family as well.
Workers' compensation also covers medical expenses related to the injury or illness. This includes any prescribed treatments, medications, and medical equipment, as well as the costs associated with any therapies, such as physical therapy or occupational therapy. Workers' compensation may also cover the cost of travel to and from medical appointments.
3 Ways You Can Acquire This Vital Coverage
If you decide that workers' compensation insurance is right for you, there are three ways you can acquire it. One is to go through your state insurance department and pay the necessary premiums. Another way is through the federal government's workers' compensation program, which is available to all employers, regardless of the number of employees. The last option is to get a private policy through a commercial insurance company.
The first two options are more affordable for small businesses than purchasing a commercial policy. However, if you use these state or federal programs, you must follow the rules and statutes of your state very closely. Your business must comply with all the state statutes regarding workers' compensation coverage, or you risk losing the protection.
The third option is the best choice for small businesses. Commercial insurance providers are accustomed to insuring small businesses, and they are able to tailor policies to fit the needs of companies with less than a dozen employees.
At the End
Workers' compensation insurance is a necessity for every business owner. If a work-related injury or illness occurs and your employees do not have coverage, they might be unable to pay their medical bills. In some cases, the state might end up paying those bills. If this happens, it will come out of the state's workers' compensation fund, which is paid for by employers who have workers' compensation coverage. If you don't have coverage and an employee gets hurt, you might have to cover those costs yourself.
In addition to protecting yourself, workers' compensation insurance also protects your employees. If a worker gets hurt and doesn't have coverage, he or she might need to go to a hospital that accepts patients who cannot afford treatment. This can leave a worker with huge medical bills that he or she cannot afford to pay. Having workers' compensation coverage can help prevent this from happening.
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