As a business owner, it’s your responsibility to oversee everything. From the taxes you pay to the employees you hire to the insurance you pay to protect everything you worked hard for. It’s down to you to ensure everything runs smoothly. Most importantly, it’s down to you to ensure every one of your staff members is protected. That’s where the right workers’ comp insurance comes into play.
The truth is, your employees might become ill or injure themselves on the job. Sometimes accidents are simply waiting to happen. Fortunately, workers’ compensation insurance like Biberk will protect your employees when any type of work-related accident or illness does happen. It’ll give them the compensation they need if they’re unable to carry on working.
But does every business need workers’ comp insurance? Can you choose to go without it?
Let’s discuss everything you need to know about workers’ compensation insurance. We’ll also answer the all-important question of, ‘Does every business actually need it?’
What is Workers’ Compensation Insurance?
Let’s start by explaining what workers’ compensation insurance is.
Workers’ compensation insurance (commonly referred to workers’ comp) is a type of insurance that provides compensation (or monetary benefits or medical care) to workers who suffer from a work-related illness or injury.
How Does Workers’ Compensation Insurance Work?
Workers’ comp doesn’t just protect your staff, it protects the business too. It’s an insurance policy that benefits both parties. Your business essentially needs a way of covering its back when an employee gets sick or has an accident. You also need a sure-fire way of having the money to pay for their recovery and time off.
As a result, workers’ comp is considered a social insurance because it is essentially a contract between management and labor, wherein it’s purchased by the business but paid for by employees. It’s essentially a tax that automatically gets deducted from an employee’s weekly or monthly wage.
What Does Workers’ Compensation Insurance Cover?
In a nutshell, workers’ comp provides medical expenses, lost wages, and rehab costs to those who need it. Usually it covers the full course and scope of the illness or injury too, from the day of the accident/illness right up until the employee is 100% fit and ready to return to work.
Here’s some of the main things your workers’ comp insurance will cover:
- Lost wages – Your employees might need time off to recover and get better. Workers’ comp provides the lost wages from the days/weeks/months/years they missed.
- Medical care expenses – Your employees’ medical care will be paid for, including any treatment they need concerning the injury or illness.
- Rehabilitation care expenses – Your employees’ long-term care will also be paid for, including any ongoing care to treat their injury/illness and get them fit to return to work.
- Death benefits – If an employee passes away from a work-related illness/injury, their funeral costs will be covered.
So, Does Every Business Need It?
Does every business need workers’ comp insurance? Is it mandatory? Or can you skip past it?
In short, no you can’t skip past it. It’s a mandatory type of insurance that almost every business needs. It’s not down to you whether you get it or not. It’s a necessity and a requirement.
It’s easy to think workers’ comp insurance is only a necessity if you’re a company operating in a high-risk industry like construction, culinary, transportation, manufacturing, and agriculture. However, the truth is, workers’ comp is a requirement no matter the industry. Even low-risk industries like finance or marketing require you to have workers’ comp. (Although high-risk jobs are more likely to have a costlier premium than low-risk jobs.)
And are there any exceptions for mandatory workers’ comp?
Well, the only exception in America is the state of Texas. It’s the only state in the entire country where employees have the option to personally opt out of paying for workers’ comp.
3 Reasons Why You Need Workers’ Compensation Insurance?
Need more convincing? Here’s the 3 main reasons why your business needs workers’ comp insurance, no matter what!
1. It’s the Law
Plain and simple, your business needs to comply with the law. You’ll be breaking the law if you don’t invest in a workers comp policy. As already mentioned, the only exception is in the state of Texas.
Please note that the governing rules and regulations surrounding workers’ comp also vary from state to state, so always double-check and do your research.
2. It Streamlines the Hiring Process
Your employees are much more likely to work at your company if you have a good workers’ comp policy. It’s all about building trust with your employees and doing all that you can to protect them if an accident were to occur.
3. You’re More Likely to Get a Loan
If you’re looking to get approved for a business loan, chances are you’ll need to have workers’ comp insurance already in place. Lenders are much more likely to approve your application if they see you’ve already put the right legal things into place. It’s all about planning ahead.
What if an Employee Is at Fault?
Workers’ comp insurance provides protection no matter who is at fault. Employees will still be protected even if they were found to be partially at fault (for example, using a piece of equipment incorrectly).
One of the only exceptions is if the employee was under the influence of drugs and alcohol.
What If I Wasn’t On-Site?
Workers’ comp insurance covers employees no matter whether they are on-site or not. For example, the employee might be remote working, staying at a hotel, or attending a social event.
One of the only exceptions is if the employee was legally on break or vacation, despite still being on-site.
How Long Can I Receive Compensation For?
The length of compensation varies according to the insurance provider and the state your business operates in. However, generally, the maximum window of coverage lasts 7 years.
How Does a Workers’ Comp Claim Work?
Always seek advice if you’re unsure about whether your business needs workers’ comp insurance or not. If you have employees, chances are it does. Always make the right choice!