A Small Business Owners Guide To Workers Compensation Insurance

December 26, 2018

If you’re the new owner of a business, or of a business that has grown to take on a workforce of employees, you may want to know more about workers compensation insurance.

What exactly is workers compensation insurance?

A safe workplace for their employees, is a legal and moral obligation for all employers, but sometimes accidents simply cannot be avoided, and when they do happen, workers compensation insurance is there to give coverage.

Firstly, workers comp ensures that those employees who have been injured while at work, get the appropriate medical care that they need, and compensation for any income lost while they were unable to work due to their injuries. The coverage also protects employers from potentially costly lawsuits from employees who have had accidents at work.

Secondly, workers comp insurance affords benefits to the dependents of the injured worker should they be killed at work, or subsequently die from their injuries. Workers also receive benefits irrespective of who was at fault in the accident.

Take note that each state is different when it comes to workers comp:

The systems that enable workers compensation, are put in place by statutes in each state, and each state is governed by state laws and court decisions that control the systems, with no two states having the same laws and regulations.

Each state will have different formulas for determining the amount of benefits an injured employee is entitled to, what impairments and injuries should be covered by the insurance, along with how they are assessed, and how the required medical treatment is to be delivered. Each state will also dictate whether the insurance should be provided by agencies run by the state, by private insurance companies, or by the state itself. States will also establish their own set of rules and guidance as to how each should be handled, and how the ensuing dispute should best be resolved.

What injuries are covered by workers comp?

If an injured workers employer has workers compensation insurance, then in theory, any injury that was sustained while the individual was at the workplace or was conducting legitimate work- related activities outside of the premises, should be covered.

Apart from injuries incurred during an accident while working, acts of terror, workplace violence and natural disasters that have harmed an employee, are also covered by the insurance.

What benefits does an injured employee receive?

If a disability is total or partial, is something that is taken into consideration when determining income replacement benefits. The American Medical Association has a list of criteria that may be consulted when assessing injuries and an individual’s capacity to work, and most states require that benefits be paid to the worker for the duration of their disability.

Do you need to buy workers compensation insurance?

In most states, if you’re a sole proprietor or have a partnership, then you’re not required to have workers comp unless or until, you have employees who don’t own your business.

If employees are paid on commission, then some states will not require employees to be covered by workers comp.

If you have employees who perform services for you as the owner or manager of a business, and this can include minors and workers who are not citizens, then you will need to buy workers compensation insurance.

For more detailed advice and guidance related to workers compensation insurance, seek help from a professional payroll service who can provide you with accurate and up to date information related to policies and where you stand in relation to the law.

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