6 Critical Things Small Business Owners Should Know About Workers Compensation Insurance
February 20, 2018
If you’re building a business and you’re ready to hire your first employee, good for you! You have a lot of things to think about – finding the best person, training them, maybe even having enough work for them to do.
One thing you may not have thought about is workers compensation insurance. Workers compensation protects your business and your employees in the event that an employee gets ill or injured on the job. Here’s what you need to know.
It’s mandated by the state.
Texas is the only state that does not require that every employer has workers compensation insurance. The requirements vary from state to state, so if you have employees in more than one state, you need to understand what each state’s laws are. The US Department of Labor has a list of state workers compensation officials on its website. Significant fines can be imposed for failure to carry the proper coverage.
It doesn’t matter what industry you are in.
Sometimes people think that workers comp is only for companies in construction trades or other industries that require physical labor. Even if your employees are sitting in front of a computer all day, you still need to protect them.
It covers illness, injury and even death.
If an employee is injured or sickened on the job or because of a work-related activity, workers compensation insurance pays their medical costs and a percentage of their lost wages while they are unable to work.
A workers compensation claim is costly.
According to National Council on Compensation Insurance data from 2016, the average claim for lost time from work was $29,100. The average indemnity claim was $23,900, for a total average claim of $53,000. This is money that will come from your bottom line if you’re not insured – in addition to any fine the state may assess.
Self-insurance is an option for larger firms.
Some employers choose not to purchase workers compensation insurance, preferring to take on the risk of a workplace injury or illness themselves. Most states allow this, provided that the company can show that it has the financial ability to pay any claims that may arise. A California company, for example, needs to show that it has a net worth of over $5 million and net profits over $500,000 each year for the past five years in order to apply to self-insure.
You can buy workers comp and liability insurance at the same time.
Hiscox offers workers compensation insurance with general liability insurance or professional liability coverage to further protect your business. You’ll save time and money by getting all your coverage from Hiscox.
You’re required to have workers compensation insurance, but you don’t need to pay too much for it.
Call 866-464-5797 to speak with a licensed agent about the best coverage for your business.
Underwritten by Hiscox Insurance Company Inc., a Chicago-based insurance company. Not available in every state.