While legal experts will tell you the best way to protect yourself from lawsuits is to just “not get sued“, that’s not always possible.
Even if you’re operating above board and doing everything right, there are plenty of examples where even the best companies get sued. That’s why it’s important to get the best workers comp insurance for small businesses before things go haywire.
Here’s everything you need to know to find the best policy.
What Companies Need Workers Compensation?
In most states, aside from Texas, the law requires employers to have workers compensation coverage. Regardless of what industry you’re in, having insurance is a must. It not only protects workers, but also employers, and any visitors or customers.
Requirements are often tied to the number of employees a business has. Some states require companies with even just one employee to have insurance. Other states require you to once you reach a certain maximum number of employees.
In a few states, your requirement for coverage is tied to your payroll costs. If you process more than a few thousands in payroll each year, you’ll have to get insured.
Depending on the type of business you’re registered as, you might not need to be insured. Sole proprietorships, where you’re theoretically working on your own, and general partners in a partnership don’t usually need insurance. If they have employees, that changes things.
What Gets Covered
Workers compensation insurance covers a lot of potential losses that an employee could face. If they’ve been injured or become ill because of job-related issues, they need help to be rehabilitated.
Expect health and medical expenses to be covered for employees. The ones who need rehabilitation or retraining can have those expenses covered with the help of insurance.
Some people lose wages during this period and workers compensation helps to mitigate those costs. If the employee sues the employer over these costs, the insurance can even help to cover those costs.
In the event of a death on the job, benefits for the surviving family members will be covered by insurance.
These are issues to think about even if you don’t work in a hazardous industry.
Find a Strong Agent or Broker
When you start looking for the right policy, interview your agents or brokers carefully. Be open to learning more and being educated by them as well. You need them to be partners who are experts and who are knowledgeable in your industry.
You need an agent who understands the requirements and how they apply to your business. An agent should be able to help by counseling you on how to mitigate costs and prevent industries. That can lower your insurance premiums and lower the chances of accidents happening at your workplace.
Learn The Requirements
Since laws vary from state to state, look into what the minimum requirements are. It’s often better to be safe than sorry and get more coverage than the bare minimum.
If your employees work in multiple states, you might have to abide by different laws. The same applies if you’re considering opening up shop in another state.
Build a Safety Plan
Every business has different potential pain points and things that can go wrong on the job. Implement a safety plan and build strong policies to mitigate risk.
Take the time to retrain employees. Even long-time trusted employees can develop bad habits over time. It’s important to refresh their memory and remind them of where to pay attention at work.
Some states even offer discounts on your premium or return credits in exchange for implementing a safety program. Talk to your agent about what kinds of discounts and credits you can get in your state.
Understand the Conditions
Policies are usually divided into different parts. There’s usually a bodily injury part that covers the results of the accident and then there is another part covering how it impacts employment.
There are also types that cover bodily injuries that come as a result of the conditions of employment. Medical treatment and disability benefits are paid no matter who is at fault.
The exceptions are connected to criminal activity, fighting, drug use, intoxication, or self-inflicted wounds. Insurance companies might pressure everyone to take a test to prove no one was under the influence at work
Being covered by employers liability helps to keep employers from being sued for common law injury claims connected to the course of employment. Third-party claims won’t stick with the right coverage.
Keep Reviewing Your Policy
Even if you’ve found a great agent who can help you get the coverage you need, you should still review your coverage annually. If conditions change at work or if rates change, you could save money or get more appropriately covered.
Make sure that nothing has changed that can negatively impact your premium. If you’re taking on a different type of work or have moved to operating in different states, you’ll have to make changes to your policy.
Don’t take on new contractors or new employees without putting into place a review of your coverage.
The Best Workers Comp Insurance For A Small Business is Customized
When seeking the best workers comp insurance for a small business, make sure that you’ve got a plan that fits your requirements. Every business operates differently and even changes over time. Talking to your agent regularly can protect you from any major suits.
Curious about workers comp as a self-employed person? Check out our latest guide.