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  • Writer's picturejoseph retcho

Workers Compensation Basics


Even though you take precautions to protect your employees from illnesses and accidents at work, the unexpected can still occur. When it does, workers compensation insurance can benefit your staff while assisting in the financial security of your company. You must have it because almost all states mandate that you do, so here is what you should know:

What is insurance for workers' compensation?

Workers Compensation insurance, also known as Workers Comp insurance, can help cover related medical costs and rehabilitation costs when an employee is hurt or ill on the job. It can also reimburse an employee for lost wages while they're out of work or if they become disabled for an extended period of time. It facilitates a safe return to work as soon as it is medically feasible. In exchange, an injured employee who receives Workers Compensation benefits is prohibited from suing you for damages. Workers Compensation insurance shields you from potential lawsuits by paying those benefits to the injured employee.

Is Workers' Compensation Insurance Necessary?

In most states, having workers compensation insurance is required by law and is strongly advised even without it. Typically, if a W-2 is issued, workers compensation insurance is required. The Workers Compensation system is governed by state statute, so each state has its own set of requirements for benefit coverage and fines for failing to insure your employees.

For instance, California mandates that you purchase Workers Compensation insurance as soon as you hire your first employee. Similar to other states, New York can fine an employer $2,000 for every 10 days they don't comply. Because of this, it's best to consult your insurance agent or the labor department in your state to avoid penalties for not having workers compensation insurance.

How do I purchase insurance for workers' compensation?

Your state will determine how you can buy workers' compensation insurance. There are typically two ways to purchase it:

  • You can buy it from a private insurance company, a local agent, or a state-run insurance fund in the majority of states.

  • Some states demand that you buy it from a state-run insurance fund.

How Are My Insurance Premium Calculated?

Your workers compensation insurance premium is affected by a number of variables, such as:

  • Your business type

  • The number of employees you have

  • Their combined salaries

  • History of workplace injuries

The more employees you have and more they earn, the more your premium. This is because higher-paid individuals may be more expensive to insure because workers compensation benefits replace a portion of an employee's income after they become disabled.

For more hazardous jobs and industries, workers compensation insurance may cost more. For instance, a construction company should anticipate paying more than a retailer or a desk job.

Your insurance provider will eventually assess how frequently your employees file Workers' Compensation claims. A policy discount may result from fewer claims, whereas the opposite may be true if there are many claims.

Your insurance agent might be able to provide you with an estimate of the annual cost of your policy before you enroll in coverage, which can help you create a budget in advance.

Do All My Legal Risks Get Covered?

Even if you have workers compensation insurance, an employee may occasionally sue you for a workplace incident. An illustration would be if a worker who is not covered by the workers' compensation law asserts that your negligence was to blame for their accident. In situations like this, workers compensation insurance is frequently combined with additional employers liability insurance, which may further cover legal expenses, including a potential settlement, for employee workplace accidents that might not be covered by a typical workers compensation policy. When you purchase your Workers Compensation policy, you can add this additional coverage.

Your most valuable resource is your workforce. Workers' compensation insurance both safeguards them and supports you, enabling the two of you to maintain your focus on expanding your company.

Contact Retcho Insurance Agency for more details on Workers Compensation and other business insurance options.

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