If you are in business, what Worker’s Compensation is about is sometimes a question until you need to provide it. Simply put, if any of your employees contracts a disease, gets injured in an accident, requires a leave of absence to heal, or passes away while on the job, said employee will be compensated through the means of this insurance. Needless to say (but I’ll say it anyway) stipulations of the insurance policy should be read carefully to know exactly what and how much is covered as part of the terms and conditions.
Who needs it?
Every business, whether big or small, is required to possess a worker’s compensation insurance as a state mandate in most states. In fact, the state of Texas is the only exception, although severity or rigidity of the mandate does fluctuate from one state to another. There is the option not to insure in some states if businesses have between three to five workers on their payroll. In most states though, it is a compulsory requirement to invest in workers’ compensation insurance as soon as you have even one employee who isn’t an investor, partner, or owner of the business and begins to work for you.
How much premium do I pay?
As with most insurance policies, the rate of insurance will vary based on a multitude of factors and how much each insurance firm gives weight to each factor. The factors include type of work; to illustrate, physically intensive and risky work such as labor at a construction site will require a higher premium as opposed to a relatively risk free environment such as a administrative assistant in an accountancy firm. The history of each individual firm’s injury records is also assessed in this regard, so if your employees get injured on the job more often than is considered normal, you will be charged a higher premium.
Once this base price is decided, most states will follow the 1% formula, which means whatever classification your employee has been slated in after assessing workplace risk is multiplied by 1% of every $100 they earn. Don’t worry, you won’t actually have to execute these calculations the insurer will do it for you, it’s just better to understand the principle going into it.
What else can it possibly cover?
Apart from the previously mentioned workplace injury, contraction of disease, loss of limb, loss of life or requirement for compensatory leave, terms of this type of policy can cover a range of other possible situations. This includes coverage of legal costs and fees if the employee makes a claim of work related injuries or illnesses that do not face up to the scrutiny of court, injury occurring to an employee in any other state apart from where you usually conduct your business, types and range of injury and illness covered, coverage for funeral expenditures, coverage to compensate family members and repayment for wages lost due to injury. So read the contract very carefully so that you know what you’re getting into, and don’t be afraid to raise any doubts you may have before you put pen to paper and make things official.
Where do I get it from?
Some states offer an in-house insurance for workers’ compensation, while private insurers, especially big ones like The Hartford, will also offer workers’ compensation policies. You can also look throughout the internet for programs in affiliate marketing. I’d like to reiterate that different companies will charge different rates based on the factors mentioned above, so explore all avenues and assess all options, and make the most financially astute choice for your business, both in terms of premium costs, and variety of coverage options.
worker image courtesy of Wikipedia