A Guide to Workers’ Compensation Insurance for Small Business Owners

Jun 30, 2020Blog0 comments

Statistics show that there were 2.8 million nonfatal workplace injuries in America in 2018.

Many of those injured would have been entitled to workers’ comp payments. If you’re an employer and one of your workers has sustained an injury, you may be liable to make such a payment.

For this reason, every employer should have workers’ compensation insurance.

Read on as we look at what you should know about workers’ compensation insurance for small business operations.

What Is Workers’ Compensation Insurance?

Workers’ compensation insurance covers employers in the event that one of their workers becomes entitled to workers’ compensation.

Without insurance, the cost of providing workers’ compensation can be crippling to a business, if not fatal. For small businesses, in particular, workers’ compensation insurance can be the difference between survival and bankruptcy after an employee accident.

What Kind of Injury Will Entitle a Worker to Workers’ Compensation?

A wide range of injuries are covered by workers’ compensation schemes. The main requirement is that the injury is work-related.

Any physical injury that is sustained during the course of work can usually count toward this idea. The most common injuries that give rise to workers’ comp claims are orthopedic issues arising from trips or falls, such as broken bones, injured muscles, and damaged ligaments or tendons.

However, workers’ compensation is not limited to jobs that involve manual labor.

A worker might also claim in respect of, for example, carpal tunnel syndrome from overuse of a computer keyboard. As computers are now ubiquitous in offices, this puts businesses of all kinds at risk.

Issues like anxiety and depression may be the subject of a workers’ comp claim. However, it is more difficult to prove causation with psychological issues, so successful claims of this nature are less common.

How Workers’ Compensation Insurance for Small Business Works

Workers’ compensation insurance works like any other insurance policy. 

You’ll pay a monthly premium, which your insurer calculates by reference to the likelihood of a claim. If one of your workers sustains an injury, the policy will cover some or all of the expenses that arise.

Payouts should generally be made within 14 days of claims if there are no complications. However, if an element of the claim is disputed, it can take a significant length of time to resolve the matter. This is especially true if the case ends up in court.

What Will Be Covered in the Event of a Claim?

Your entitlements in the event of a claim will vary depending on your level of coverage. Ordinarily, expenses relating to medical expenses will be covered, as will funds to replace wages that the worker has lost out on while injured.

Is It Illegal Not to Have Workers’ Compensation Insurance?

The rules on workers’ compensation insurance vary widely from state to state. Most states require businesses to carry it in some set of circumstances, however. The only state that has no requirements in terms of workers’ compensation insurance is Texas.

In Florida, the general rule is that businesses with more than four employees must have workers’ compensation insurance. If your business is in the construction industry, however, you will have to get coverage regardless of your number of employees.

It does not matter whether your employees are full-time or part-time. As long as there are more than four of them, you’ll need workers’ compensation insurance.

Independent contractors are not counted as employees, so you won’t be required to carry workers’ compensation insurance for them. This exception does not apply to the construction industry, however.

If you’re found not to have insurance when you’re legally required to, this may be a criminal offense in some states. The specific rules and applicable penalties vary from one state to the next.

In Florida, only civil liability will attach to a failure to hold workers’ compensation insurance. This means you won’t face a criminal record or jail term if you fail to carry it.

However, you could be issued with a stop-work order.

Such an order would require you to stop all operations until you pay a fine. This fine is usually twice the amount you would have paid for insurance over the preceding two years.

Failure to comply with the order may lead to a criminal charge.

What Does Workers’ Compensation Insurance Cost?

As is the case with any insurance policy, premiums for workers’ compensation insurance vary widely. A number of factors are relevant in determining how much you’ll have to pay.

The more workers you have, the greater the risk that one of them will be injured. This means that your premium will increase for each additional worker you wish to insure.

The nature of your business will also be relevant. If your line of work is one that exposes your employees to a lot of physical risks, this will make your premium significantly higher.

Another important consideration is your claims history. If you have made a number of insurance claims in the past, your premium is going to be higher.

There tends to be a correlation between dangerous work and higher numbers of claims. Therefore, if your business is a dangerous one, it is important that you stress the importance of safety best practices to your workers.

Get the Coverage You Need Today

Workers’ compensation insurance for small business is a must. Even if it’s not a legal requirement for you, it’s a small price to pay for the comfort of knowing that your business won’t be at risk due to an accident.

If you’d like to inquire about buying cover, or you have a question about any of our services, contact us today. We’ll provide a quote for your business for free! HTML Article Content

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