In almost every state, workers’ compensation insurance is required for any employer with one or more employees. This coverage aims to help an employee after an injury or illness while protecting employers from lawsuits brought by workers.
Limits
Workers compensation insurance policy is designed to provide benefits for workers injured or developing an illness due to their job. These benefits include medical care, rehabilitation expenses, and lost wages. It also provides death benefits to dependents if an employee dies from a workplace injury.
Unlike other commercial policies, workers’ comp has no limit on the benefits it will pay to an injured worker or his family. This is called the “exclusive remedy” doctrine.
Part One of a standard policy covers the benefits your company must pay under your state’s workers’ compensation laws, including medical and rehabilitation expenses. It also protects against claims that an employee can sue you for additional damages that aren’t covered under workers’ compensation statutes.
While this coverage is essential, more is needed to cover your liability fully. Consequently, most states now require that you have employers’ liability coverage.
Employers’ liability is separate from the workers’ comp portion of your policy. Typically, this coverage is written on an individual policy basis. The limits you purchase are usually limited to the statutory state-required limits for Part 2 of your policy or employer liability.
These limits are often set at $100,000 for each accident or per occurrence and $500,000. You may increase your employer liability limits at your discretion, but improving these limits will generally cost 2%-3% of your premium.
Coverage
The policy covers injuries and illnesses that occur on the job. It provides medical care, wage replacement to injured employees, and death benefits for their surviving family members.
It also protects employers from high legal costs and medical expenses if they are sued by an employee who suffered an on-the-job injury. Each state requires this coverage, and it is available to businesses that hire people as employees.
Coverage A pays for a portion of an employee’s weekly wages when they cannot work due to their injury or illness. It may also pay for medical care, rehabilitation, and death benefits.
Premiums vary depending on an employer’s industry classification code and payroll. They may be higher for businesses with high risk or those with a lengthy claims history.
Employers can save money by establishing a solid safety record and getting on board with job injury response tools. This is referred to as an “experience rating” system, and it helps control the cost of workers’ comp premiums.
In addition to covering employees, a business owners policy (BOP) can also provide enhanced protection for the equipment you use in your business. It usually includes general liability insurance, property insurance, and workers’ compensation.
Expenses
Whether you run your business or have employees, you need workers’ compensation insurance. This policy can provide medical expenses, lost wages, and job retraining for an employee who has suffered a work-related injury or illness. It also helps pay the family of a worker killed on the job.
In addition, workers’ comp can help replace part of an employee’s salary while they are out of work due to a disability. These benefits can be very beneficial to your business and will help you maintain a healthy labor force.
The cost of workers’ comp varies from state to state and is determined by several factors. The main ones include the nature of the business, its location, and its claims history.
For example, many states have optional medical deductibles in their workers’ comp policies to encourage safety consciousness among employers and reduce overall workers’ comp costs.
Another way to reduce workers’ comp costs is to train employees to avoid workplace injuries. This can involve training them on safe working procedures and equipping them with safety equipment.
If you have a severe workplace injury, consider hiring an attorney to represent your interests. Using a lawyer can help you avoid settling your case for less than the actual value of your claim.
Requirements
Insurers can audit payroll records anytime during the policy term, including interim audits. Failure to comply with an insurance company’s audit can result in the cancellation or non-renewal of a policy.
The financial stability of an insurer is a critical factor in the workers’ compensation industry. Loss reserves must be accurate and regularly revised based on current claims information.
Most states offer optional medical deductibles to help offset the cost of workers’ compensation benefits. These deductibles encourage employers to prioritize safety and pay attention to the needs of injured employees.
Many employers experience large payroll fluctuations. Some insurers require monthly payroll reporting, which is especially helpful for small businesses that operate on a fluctuating schedule.
