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2021 Guide to Workers Comp Insurance for Your Business

What is Workers Comp Insurance?

Workers’ compensation insurance is a type of business insurance that is helpful to both employers and workers. It provides coverage for employees who have experienced an on-the-job injury or illness, paying  for their medical expenses, lost wages, death benefits, and more. Nearly every state requires employers to purchase and maintain workers’ comp to protect their employees and business.

Regardless of everything you do to keep the workplace safe for your employees, the reality is that on-the-job injuries happen every day. And in the event that you or one of your employees is injured while working, can you afford to pay for medical bills and treatment costs? What about if an employee were to file suit in relation to a workplace incident?

Workers’ comp is the peace of mind that, should an injury or accident occur, you won’t be left to bear the burden of a potentially devastating cost alone. Instead of worrying about potential risks and financial strain, you can focus on what matters most—running your business.

Below, we cover everything you need to know about workers comp insurance, from who needs and what it covers to how you can lower your rates. Let’s get started!

What Does Workers Comp Cover?

Workers’ compensation policies vary from state to state. However, it typically covers any sudden injury or illness or problem that arises from ongoing work circumstances. This may include:

  • Falls at the workplace
  • Cuts from sharp objects or machinery
  • Long-term injuries, such as carpal tunnel syndrome
  • Respiratory issues from breathing toxic chemicals
  • Suffering an accident on the road while driving for a work-related task

However, there are some exceptions. Injuries that are self-inflicted, a result of psychiatric conditions, a result of not following workplace safety policies, or a result of fighting, drugs, or alcohol are not usually covered.

Workers’ compensation varies from state to state, so the amount an employee will receive depends on their work location. However, most workers compensation policies cover the following:

  • Death benefits
  • Lost wages and medical expenses of the injured employee
  • Protection against legal claims made by an employee (except in North Dakota, Ohio, Washington and Wyoming)

How to Use Workers Comp Insurance

The process of workers’ comp insurance can vary from state to state but generally follows the following steps:

  • An employee receives immediate medical attention.
  • An employee reports their injury or illness to their employer.
  • The employer gives the employee paperwork explaining and pertaining to the claims process.
  • The employee completes the necessary documentation and returns it, along with any medical bills, to the employer, who can then file the claim.
  • The employer’s insurance company reviews the claim and either approves or denies it.
  • If the claim is denied, the employee can request an appeal.
  • If the insurer approves the claim, the employee will receive their benefits.

Factors That Affect Workers’ Comp Rates

Budgeting is an important aspect of running a business, so when looking for insurance coverage cost will be a factor. The cost of workers’ comp coverage depends on the rates set by the state for the jobs your employees do, as well as the following factors:

  • Location of your business
  • Workers’ compensation class codes
  • Number of employees
  • How much you spend on payroll
  • Workers’ compensation claims history
  • Risk mitigation

The most accurate way to determine how much you’ll pay for workers’ comp coverage is to get a quote from a provider. Potential insurers will evaluate the factors that are unique to your business and provide a quote based on your specific needs and workers’ comp history. 

How to Lower Workers’ Compensation Premiums

Although it’s impossible to completely prevent all occupational injuries from occurring, setting your team up for safety and success can have a huge impact, not just on your insurance rates premiums but also on the well-being of your team.

So how can you be proactive and help keep your workers’ compensation rates low? Luckily, there are some steps you can take to mitigate the number of incidents in the workplace—and therefore, the number of workers’ comp claims your business has. This will help to lower your premiums because insurers look highly upon businesses that prioritize workplace safety and have a lower history of serious injuries. Some of those strategies include: 

  • Offer employee training programs on safety
  • Conduct in-depth onboarding for each new hire
  • Follow industry best practices regarding proper safety techniques
  • Strictly enforce all safety protocols
  • If an incident occurs, quickly investigate to see what caused it and how it can be prevented in the future
  • Quickly report injuries or illnesses when they occur, and ensure that employees immediate medical attention when necessary

When you implement strict safety procedures to mitigate claims and potentially lower your workers’ comp rates, you’re also making your business environment a safer place to work — it’s a win-win!

Who is Required to Carry Workers’ Compensation Insurance?

Every state in the US, with the exception of Texas, requires private employers to purchase workers compensation insurance for their employees.

However, this coverage is very important and should be carried even where it is not required.  Without workers’ comp, business owners may be held responsible for paying for the damages of injuries and illnesses, including potential legal costs if an employee files a lawsuit.

Businesses that fail to provide workers’ compensation insurance may face significant and costly repercussions, including payment of claims out of pocket, fines, and possible imprisonment, as well as possibly losing the right to conduct business in the state.

Invest In Your Business With Affordable Business Insurance 

Workers compensation coverage is important for adhering to the law in your state, but it also protects your employees and your business, giving you the ultimate peace of mind. Best of all, choosing a policy doesn’t have to be expensive or stressful. We make shopping for insurance a piece of cake, with fast and affordable online business insurance quotes to help you plan and save. Get yours today, and join the rest of the business owners and employees who are saving on their workers comp insurance every month!

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