What is Workers Compensation Insurance?

Guide for Small Business Owners to Understanding Workers Compensation

In the line of business, it cannot be avoided that there will be accidents along the way.  Having a worker’s compensation insurance is a protection for your business in cases of these accidents.  They protect the owners of the business from employee’s claims when a work-related injury or an illness is sustained due to business operations or that it is experienced in the business premises.  It is mandatory in all states for most business to carry worker’s compensation insurance or workers comp for their employees.  To get guidance and more information about the type of workers compensation and the coverage required for your business, see an agent or an insurance representative in your state.

A workers compensation insurance covers claims of an injured employee’s lost wages, medical expenses and bills and rehabilitation costs if any.  The employer or his business may be held liable for the medical expenses, if an employee incurs injury on the job and he doesn’t have the necessary coverage of workers compensation insurance.  It may also be possible that the business may face penalties and fines for noncompliance of acquiring workers compensation insurance for its employees.

Workers compensation insurance rates vary.  Depending on the industry that the business is in, history of claims or work-related injury or illness in that business sector will determine the rate of the insurance coverage.  It is typical that for a business that is acquiring workers compensation insurance for the first time, the rate will depend on its industry and the scale of its company’s payroll.  This will change after a few years time and the insurance company may base their premiums on the company’s actual experience.

Not all employees are eligible for workers compensation insurance provided by an employer.  Examples of ineligible employees are domestic employees in private homes, independent contractors, business owners and farm workers.

Avoiding Accidents In The Workplace;

By taking extra care to minimize the risk of injury in the workplace, you are also taking steps in lowering your workers compensation insurance premiums. 

• Make sure that there is a safety manual for every employee to read and know about.  That all employees are familiarized and oriented on the safety measures of your organization. 

• Having machinery in the workplace is always a magnet for injury.  Make sure that the operator of any machinery has been trained to manage it.  Also, make sure that other employees do not operate the machinery if it is not their job to do so. This way, you minimize the risk of your employees being injured.

• Always provide protective clothing and safety gear for your employees to help prevent accidents.

• Your office area must be kept in good physical condition.  Ensure that any wirings and cables from telephones and computers are not exposed or can create a hazardous setting in the office.

It is the employer’s legal responsibility to create a safe working environment for all their employees.  However, it really cannot be denied that accidents happen even if all measures have been taken to avoid such accidents.  This is why it is required by law to acquire workers compensation insurance for your employees.