Understanding the importance of workers’ compensation insurance is vital for small business owners. The necessity for this coverage can be more nuanced than it appears. Key questions arise: Do you need to cover remote workers? Are part-time employees included? What about subcontractors?
Despite preventive measures taken by small business owners, workplace accidents can still occur. Thus, workers’ compensation insurance remains a crucial form of protection.
What Is Workers’ Compensation Insurance?
Workers’ compensation insurance, often referred to as workman’s comp, provides essential coverage for employees who suffer injuries or illnesses while on the job. In many states, businesses with employees are mandated to carry this insurance.
Reasons to Invest in Workers’ Comp Insurance
Consider a small business owner in Texas, where workers’ comp is not obligatory. Meanwhile, in Arkansas, businesses can forgo it if they have fewer than three employees, while Alabama mandates it for those with five or more staff members.
Regardless of state-specific requirements, obtaining workers’ compensation insurance is a smart strategy to safeguard your business:
- An injured employee can pursue legal action for lost wages and medical expenses.
- Part-time workers and subcontractors should be included under your coverage to prevent potential lawsuits for workplace injuries.
- Most states enforce workers’ comp insurance even with just one employee on the payroll.
- Coverage for remote workers is necessary, as they complete job duties within work hours and require protection.
Workers Compensation and Remote Employees: Essential Insights
As a small business owner employing remote workers, ensuring their safety is paramount. Insurance providers may require you to conduct a physical inspection of a remote worker’s workspace before granting coverage.
The most frequent claims from remote employees include slips, trips, falls, and ergonomic-related injuries. It’s your responsibility to ensure their work environment is safe and ergonomically sound, even from a distance.
What’s Covered Under Workers’ Compensation Insurance?
Securing a workers’ compensation policy is often a legal requirement in many states. Here’s what this insurance typically covers:
Medical Expenses
The insurance covers medical costs linked to on-the-job injuries, assisting with medical bills, physical therapy, and ongoing treatment.
Lost Wages
Workers’ comp offers financial support for injured employees similar to long-term disability benefits.
Death Benefits
If an employee dies due to a work-related incident, this insurance will provide death benefits to dependents.
Coverage for Part-Time Employees and Subcontractors
Consult with your insurance provider to add part-time workers and independent contractors to your policy, enhancing your financial protection against workplace injuries.
Exclusions of Workers Compensation Insurance
While workers’ compensation provides essential coverage, it does not replace commercial general liability, professional liability insurance, or property insurance.
Here are some exclusions:
- COVID-19 related claims—Consult your provider as previous broad protections may no longer apply.
- Part-time employees and subcontractors are not automatically covered unless specified in your policy.
- Injuries occurring during voluntary team events are not covered unless explicitly stated as mandatory.
- Incidents stemming from personal disputes between employees are not covered.
- Injuries resulting from substance abuse while at work are excluded.
Cost of Workers Comp Insurance for Small Businesses
The cost of workers’ compensation insurance is influenced by several factors, including payroll, the nature of the work, and claims history. Typically, costs range from $1 to $1.56 per $100 of gross income, with variations by state and type of business.
U.S. Workers Compensation Insurance Requirements
While requirements differ by state, most businesses must obtain workers’ comp insurance if they have employees. Failure to comply can lead to serious legal consequences.
How to Obtain Workers Compensation Insurance for Small Businesses
Securing workers’ comp insurance can be accomplished online with a few straightforward steps:
- Review state requirements and begin coverage when you hire your first employee.
- Connect with fellow business owners for provider recommendations.
- Select an insurance provider experienced in small business workers’ compensation.
- Request quotes from multiple carriers and compare offerings.
- Choose a policy and finalize the enrollment process.
