Worker’s compensation insurance is mandatory coverage for business owners in most states in the United States. Apart from being a requirement of the law, it is an essential risk management plan that can help you achieve business sustainability, as it covers your business against claims for:
– Lost wages
– Medical treatment
– Death benefit claims
– Disability
– Accidents at work
How Does Workers Compensation Insurance Work?
Regardless of how you make your business environment safe for your employee, you can’t completely rule out events of work-related injuries, illnesses, or even death. Cases like these are what Workers Comp helps to mitigate by providing coverage to any affected worker in the following ways:
Disability
Workers compensation insurance replaces a specified portion of an employee’s loss of income while recovering from a work-related injury or illness. Disability definitions under this policy are four types, namely:
– Temporary partial disability: A short-term disability that partly makes a worker unfit to work
– Temporary total disability: A short-term disability that completely prevents a worker from working during a short period.
– Permanent partial disability: A permanent injury or impairment that partially limits an employee’s performance and earning power
– Permanent total disability: A permanent impairment that completely prevents the affected workers from ever doing the same job……….
Worker compensation for disability is sold with a specified waiting period – meaning a disability must last beyond the period before an employee could be eligible for claims. The benefit payment is typically based on the specified percentage of the current income, usually 66% in many states.
Medical Expenses
Workers compensation pays for an employee’s cost of treating a work-related injury or illness. The policy covers bills for hospital visits, surgery, and necessary aids for recovery, such as crutches, wheelchair, or braces. Depending on the state, the covered expenses may also include therapies, chiropractic or biofeedback.
Rehabilitation
In some states, workers compensation covers the cost of rehabilitative therapies needed to help an employee recover from a work-related injury. The coverage could also include psychological rehabilitation for those who suffer mental injury.
Death
The policy pays death benefits to relatives of an employee if the worker dies on the job or from an illness or injury sustained at work. The death benefit is to provide the dependent children or spouse of the deceased worker with a financial safety net to help cushion the effects of their loss. It may also cover burial cost.
Employer’s Liability Insurance
Employer’s Liability Insurance
Employer’s liability is a significant component of worker’s compensation designed to protect you against damages claims from your employees. Workers comp is generally responsible for a work-related injury or illness claims. However, if employees feel the injury or illness was caused by an employer’s negligence, they may file a lawsuit for additional damages specifically against the employer. Lawsuit cost such as court costs, lawyer’s fee, and settlements are what employer’s liability arm of workers compensation will help you cover.
What Determines Workers Compensation Insurance Cost?
Number of Employees: Almost all states require a business to buy workers compensation insurance immediately after hiring the first worker for your business. The number of employees will be considered by your insurer for the policy’s price.
Payroll Size: Your payroll unavoidably increases as you hire more hands. This will mean a periodic review and increase of your worker compensation insurance needs and budget.
Your Industry: Some businesses are considered as high-risk industries due to the rate and severity of work-related injuries and illnesses they are known for. If your company operates in such, expect to pay a higher premium for your policy.