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What Is Workers Compensation Insurance?

Workers compensation is an important form of small business insurance and commercial insurance that every business owner should understand. However, there is a degree of confusion amongst small business owners regarding what this form of insurance actually covers and when to use it. No matter what industry you operate in, accidents can happen and employees can get sick or injured. Workers comp insurance exists to offer financial support to sick and/or injured employees and protect business owners from legal claims that may arise. Keep reading to learn more about workers compensation insurance.

What is workers compensation insurance?

Workers compensation insurance provides medical and wage benefits to employees who are injured or become ill at work. Workers comp can cover medical expenses, supplement lost wages, and reimburse rehabilitation costs to employees who are injured or become sick “in the course and scope” of their job. Workers compensation insurance can also pay death benefits to families of employees who are killed on the job.

Do I need worker’s compensation insurance?

Every state has laws on the books regarding worker’s compensation insurance and sometimes these laws can look very similar. In general, every state, with a very small number of exceptions, requires all businesses with employees to secure worker’s compensation insurance for employees. Businesses that fail to provide worker’s comp coverage can face steep fines and can be responsible for paying claims out of pocket if an accident arises. In some states, businesses that fail to secure worker’s comp insurance may lose the right to conduct business in that state.

Is worker’s compensation insurance required? 

Worker’s compensation is one of the most common insurance coverages in the United States. It is required by law in some form in every state, however, there are a limited number of exemptions in 2 states that may exempt a business owner from securing coverage. The size of a business, the industry, and the number of employees all determine how much worker’s comp insurance a business will need. A licensed insurance advisor can provide guidance on workers comp coverage requirements in a specific state.

Worker’s Compensation Insurance Cost

The cost of worker’s compensation insurance coverage can vary based on many factors. The business size, industry, state, and the number of employees all affect the cost of worker’s comp insurance. Other considerations such as the type of labor performed, equipment used, risky tasks, and claims history also affect the cost of worker’s comp insurance. For example, the cost of a worker’s comp insurance policy for a furniture retailer with 15 full-time warehouse employees operating forklifts will be very different from a worker’s compensation insurance policy for a small convenience store with 6 employees. A licensed insurance advisor will be able to identify worker’s comp insurance discounts that a business may qualify for, along with discounts for bundling worker’s compensation insurance with other commercial insurance and small business insurance coverages.

What does worker’s comp insurance cover?

A deeper dive into workmans comp insurance coverage:

How to file a workers comp insurance claim?

An injured employee must visit a healthcare professional as soon as possible for an examination and treatment. At this time the doctor will provide medical records that will be used to support claims. The employee can then begin the claims filing process with the insurance carrier using the doctor-provided records and any state-mandated forms. Once the claim is approved, the recipient will begin receiving compensation payments until they can resume working.

Workers compensation insurance vs. Health insurance

It’s important to know the difference between workers compensation insurance and health insurance. It is a common misconception that health insurance will cover workers comp claims. Unfortunately, this is not true. Health insurance often refers to employer-sponsored healthcare coverage obtained through an employer. This is the most common way Americans get health insurance. In this case, the employer chooses the healthcare plan options and splits the cost of the premiums with the employee. Health insurance will help cover the cost of treating illness and injuries but only if these afflictions occur outside of the workplace. 

Workers compensation insurance vs. General liability insurance

Some people also mistakenly believe that general liability insurance will cover workers comp claims. This too is incorrect. A general liability insurance policy will help cover medical expenses and legal fees resulting from injuries and property damage to third parties for which a business may be legally responsible. General liability coverage does not extend to employees of that business.

How can I get workers compensation insurance?

CoverHound offers many resources for small business owners to plan for, prevent, and insure against costly accidents, employee injuries, and litigation. Visit CoverHound to learn about the Workers Compensation policies that are appropriate for your industry and business size. You can also get personalized quotes to review and consider before making a purchase. Click here for more information.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.

Insurance shopping simplified

Review personalized quotes, select coverages, and buy online - Everything insurance, all-in-one-place.
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