What is Workers Compensation Insurance?
Workers compensation insurance protects your employees and your business from work-related accidents, illnesses, and even death. Nearly every state requires that employers have insurance to cover medical costs and lost wages for workers who are injured or become ill on the job. If you don’t carry workers compensation insurance, you could be liable for these costs, and be subject to fines or penalties by the state.
Workplace injuries happen even in the safest of workspaces. Even if your employee has health insurance, you are responsible for their medical costs if they suffer a job-related injury or illness. In addition, the worker is entitled to a percentage of their regular wages during the time that they are unable to work due to their injury or illness. These costs are covered by workers compensation insurance. If you don’t have insurance, you will have to pay these costs out of pocket.
You need Workers Comp Insurance if your business:
- Is ready to hire your first employee
- Has one or more full time employees
- Has one or more part-time employees (in most states)
How does Workers Compensation work?
The cost of workers comp insurance is paid by the employer. It is simply a cost associated with having one or more employees. Unlike other kinds of insurance for employees, like health insurance, the cost of workers compensation is not shared between the employer and the employee.
While the employer must bear the cost of workers compensation insurance, consider what would happen if your company was not insured. You would likely still be required, under state law, to cover your employee’s medical costs and lost wages in the event of a work-related accident, illness or death. In addition, you would be subject to fines or penalties from the state if you were not insured.
Examples of Workers Compensation claims:
Workers compensation insurance offers broad coverage designed to protect your business and your employees. Here are some examples of what could go wrong and how it could be covered:
- While placing a box on a high shelf in the warehouse, an employee inadvertently knocks down another box, which lands on their head. The employee is taken to the hospital and is diagnosed with a concussion. The doctor requires the employee to remain in the hospital for 24 hours and to stay on bed rest for a week. Workers compensation insurance could pay for the cost of the employee’s hospital visit as well as a portion of their wages for the missed week of work.
- A data analyst spends most of their workday using their computer. They begin to notice discomfort in both wrists, which turns to pain as the day goes on. Their doctor diagnoses carpal tunnel syndrome, and recommends surgery. The cost of the surgery is covered by workers comp insurance, as is a portion of the employee’s wages while they are out of work to recover.
- An electrical subcontractor is working on a rehab of an old building. The electrician accidentally cuts a live wire and is electrocuted. The worker survives, but has a lengthy hospital stay and rehabilitation before they can return to work. Workers compensation insurance covers the worker’s medical costs and a percentage of lost wages.
Make sure your business is fully protected
To make sure your business is fully protected, consider adding other Hiscox business insurance coverage in addition to workers comp insurance. Hiscox offers three types of business liability insurance, any of which can be bundled with a workers comp insurance policy to provide the comprehensive insurance protection that your business needs.
General Liability Insurance
General liability insurance, also known as commercial general liability insurance (CGL) protects your business from another person or business’s claims of bodily injury, associated medical costs and damage to property. General liability insurance is required to purchase workers comp insurance
Professional Liability Insurance
Professional liability insurance, also called errors and omissions or E&O coverage, protects your business if you are sued for negligence, even if you haven't made a mistake.
Business Owners Policy
Business owners policy (BOP) is enhanced insurance that combines general liability insurance and property insurance, adding protection for the equipment you use in your business
Need more information about Workers Compensation Insurance?
Check out the Hiscox Small Business Blog for more information about workers compensation insurance and many other topics to help you grow your business, such as:
Workers compensation insurance is subject to underwriting guidelines. Not available for all classes of business.
This information is provided to assist you in understanding the coverage we offer and does not modify the terms and conditions of any insurance policy, nor does it imply any claim is covered. Underwritten by Hiscox Insurance Company Inc., 104 South Michigan Avenue, Suite 600, Chicago IL 60603. Administered by Hiscox Inc., doing business in CA as Hiscox Insurance Agency.