Does your business need workers compensation insurance?

Just about every business requires workers’ compensation insurance. There are a few exceptions, primarily businesses owned and operated by a sole entrepreneur. In certain states, small businesses with less than 3-5 employees are not forced to have the policy. However, the vast majority of businesses are required by law to have workers compensation insurance. Texas is the only state where this type of insurance is not required.

The Purpose of Workers Compensation Insurance

This insurance policy covers injuries as well as occupational diseases that are causally related to workplace activities. These injuries can occur on-site or even off-site if the activity is related to the employee’s duties. It does not matter if the employer or employee is at fault. The employee can make a mistake or contribute to his injury/illness in another manner and the employer will be liable for the full cost of ensuing treatment unless a workers compensation insurance policy is in place. Such a policy covers areas ranging from loss of limb to repetitive motion injuries, diseases such as emphysema, follow-up treatment, and lost wages.

A Legal Responsibility to Make the Work Site Safe

Employers are legally responsible for making the workplace safe for their employees. The failure to have an adequate workers compensation insurance policy in place can result in potentially devastating lawsuits after an employee injury. Imagine an instance in which an employee who works on a construction site suffers a fall from a faulty scaffold and subsequently has a limb removed. If a workers compensation insurance policy were not in place, the injured worker could sue his employer for costs associated with pain, suffering, medical care and compensation for lost wages. This is precisely why nearly ever state forces businesses to purchase workers compensation insurance.

Coverage and Cost Details

Certain states allow employers to self-insure rather than take out workers compensation insurance. Self-insurance covers the costs stemming from injuries causally related to job duties. However, most companies are not in a financial state or a line of business that makes self-insurance a viable option. Most elect to take out a workers compensation insurance policy with payments tied to their specific occupational code as designated by the National Council on Compensation Insurance. Each of these codes carries a unique premium. Low-risk jobs like secretaries or clerks will have a low premium while riskier jobs like construction workers or truck drivers will have a substantial premium.

To discuss whether your business needs workers compensation insurance, call the professionals at Niroc Consultants. We’d be happy to put together a plan that fits your needs and budget.