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Workers Compensation Insurance

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What is workers’ compensation insurance?

workers compensation insurance

Workers’ compensation insurance, also called workers’ comp, provides coverage for medical expenses and lost wages for employees who are injured or become ill on the job. This coverage may also provide benefits for employee rehabilitation.

Who needs workers’ compensation insurance?

If you run a small business and have employees, you need workers’ compensation insurance. In fact, in nearly every state, workers’ compensation insurance is compulsory. If you run your business without workers’ compensation, you may be subject to fines. So, this is typically not considered optional business insurance coverage.

This is not a bad thing, however. Workers’ comp provides important coverage that protects both the employee and employer. It provides medical and rehabilitation benefits to an employee injured on the job, and legal defense to the employer if sued over workplace accidents.

Workers compensation

Let’s review why your business needs worker’s comp:

  • It’s required by state law.
  • Protects the employee by providing medical expenses
  • Protects the employee with lost wage benefits
  • Protects the employer from paying medical expenses and lost wages associated with workplace accidents
  • Protects the employer from employee lawsuits over workplace accidents

How does workers’ compensation insurance work?

The rules and regulations for dealing with workers’ compensation will be set by your state. Each state will be unique. Both employers and employees will be compelled to follow laws, regulations, and guidelines prescribed by the state. These regulations will help ensure that the employer provides for work-related injuries or occupational diseases, regardless of employee negligence.

Employees will only receive benefits if their injury or illness is a result of their job duties or employment. For example, workers’ comp insurance typically covers injuries caused by:

  • Lifting
  • Falling objects
  • Slipping
  • Accidents (eg. fires or explosions)

However, if an employee is injured outside their employment, hiking with friends or surfing. Workers’ compensation insurance does not provide coverage.

How do I buy workers’ compensation insurance?

Typically, workers’ compensation has been purchased through insurance agents, like IronPoint. However, in recent years it’s become more common to quote or purchase workers’ comp online.

In most states, you can purchase workers’ compensation through private insurance carriers, like our carrier partners Travelers, Nationwide, The Hartford, or Berkshire Hathaway GUARD.

In some states, business owners have limited options for securing a workers’ comp insurance policy. If you need coverage in Ohio, North Dakota, Washington, or Wyoming, you will have to contact your state for coverage.

Workers Compensation Cost

How much does workers’ compensation cost?

There are many sites that will quote average costs for workers’ compensation insurance. However, your work comp cost may not be similar to the average. The actual cost is based on a number of factors, including:

  • Employee payroll
  • Business location
  • Number of employees
  • Employee and business classes
  • Claims history

The best way to know how much workers’ comp will cost your small business is to get a quote. IronPoint can provide you with a quote and compare it with our several highly-rated insurance carrier partners.

Do self-employed business owners need
workers’ compensation insurance?

Self-employed business owners are typically not required to purchase workers’ comp. State regulations generally require businesses with employees to purchase workers’ compensation insurance.

However, it’s not uncommon for sole proprietors, independent contractors, and other self-employed business owners to need workers’ comp to fulfill the terms of a contract or to protect their income.

Most health insurance policies exclude coverage for work-related injuries and illnesses. If you carry workers’ comp as an independent contractor, your medical bills will be covered when you’re injured on the job.

Workers’ comp can also partially replace wages lost while taking time off to recover from a work-related injury.

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Workers’ Compensation Insurance FAQs

Is workers’ compensation insurance required by law?

Each state sets its own regulations for workers’ comp. Most states require it as soon as you hire your first employee. If you’re not sure, consult an insurance agent or visit your state’s department of insurance website.

What doesn’t workers’ compensation insurance cover?

Typically, workers’ comp doesn’t cover injuries or illnesses that occur outside of employment. Workers’ comp also does not cover intentional injuries or those that occur commuting to and from work. Injuries or illnesses that are the result of being intoxicated or due to substance abuse are likely not covered by workers’ compensation.

Do I need still need employers practices liability insurance?

Employer’s Practices Liability Insurance (“EPLI”) provides coverage to the employer from lawsuits related to damages or injury that results as part of your employment practices. This coverage helps provide protection for losses rated to wrongful termination, harassment, or other employment-related matters.

This should not be mistaken for coverage provided by your workers’ compensation insurance. If you believe you need protection from employment liabilities, you should consider purchasing a separate EPLI policy.

If you are unsure of the differences between the two coverages, contact your insurance agent to review both and purchase the coverage right for your business.

Why does worker classification matter?

Worker’s compensation uses a classification for your business segment, similar to other lines of business insurance. However, it also classifies your different employees. Both classifications influence your premium.

For instance, if you have a manufacturing business, office or sales staff may be classified differently than mechanics and line workers.

It is important to get these classifications correct. They are subject to audit, and you may be fined if you attempt to misclassify employees or payroll to get lower premiums.