When A Small Business Needs Workers’ Compensation Insurance?

When A Small Business Needs Workers' Compensation Insurance?

Do you know, nearly three million nonfatal illnesses and injuries occur in US workplaces every year! But even less than 40% of these three million files a Workers’ compensation claim! It paints but a sad picture. Not opting for a Workers’ compensation policy or not filing a claim when needed makes things difficult for both employers and employees. But how, let’s see in this article when a small business needs workers’ compensation insurance!


When A Small Businesses Needs Workers’ Compensation Insurance?

A workers’ compensation policy is mandatory by law, even if you have a single employee. But employers should buy it not only because they are bound by law but also because it is in the best interests of both the employer and employee.


#1: Pays For Workers’ Injuries On The Job

The pandemic has already done substantial financial damage to many small businesses, and an additional worker injury or illness can wreck the entire finance model.

Suppose one of your workers suffers a critical injury while delivering a parcel for your company; it can land you in a serious dilemma. Even if you sincerely want to pay for its damages, the medical bills can threaten your business continuity.

But on the other hand, if you have insurance, it will guarantee that your employee gets the best medical treatment. And you can relax from your liabilities to pay for its medical bills.

Also, businesses are accountable by law to provide a safe workplace for their employees. Therefore a policy is a must as accidents are possible even in the safest place. And it’s better to be safe than sorry.

And for your knowledge, Workers’ compensation insurance covers the following:

  1. Any disability the employee suffers on the job.
  2. Any illness employee contracts on the job and the wages lost due to such illness.
  3. Benefits to family members in case of death of the employee on the job.
  4. And lastly, Reskilling or rehabilitation costs.


#2: Safeguards Your Business Against Lawsuits

It may seem that another state-mandated insurance is one more overhead expense for your business. However, if you look at it from the perspective that paying a small premium every month is better than hefty hospital bills or legal costs.

When a business avails of workers’ comp insurance, there are fewer chances that an employee would drag you to court for a workplace injury.

Suppose you did not avail of the insurance. You will be at risk of being sued if an employee sustains a disability on the job and doesn’t receive financial support for medical care from you.

In a worst-case scenario, you might even end up paying its lifelong wages in a court settlement. And thus, it is always advisable for a small business to invest in a good insurance policy. Worker’s Compensation Insurance: What It Is And What Does It Cover?


How Can Availing Workers’ Compensation Help Small Businesses?


#1: Helps Avoid Penalties For Non-Compliance

Workers’ comp insurance is mandatory in every US state except Texas, implying that you are legally liable to buy a workers’ compensation policy even if you have a single employee!

And non-compliance is a criminal offense and you could end up in a hefty lawsuit or worse!

Also, without insurance, you are responsible for the onsite injury of your employees. This could lead to a financial setback in case of out-of-pocket medical expenses.

Thus, it’s always in your best interests to get insurance coverage for anyone who works for you.  


#2: Helps Boost Employee Morale

When your employees know that you will support them if they sustain an injury, it builds on their trust and respect for you. They will genuinely give their sweat and blood to your company to help it grow.

A workers’ comp policy says that you value their safety. It is an easy way to gain their loyalty.

On the other hand, not protecting them with workers’ compensation insurance can result in reduced employee morale.


#3: Helps Collaborate With Other Businesses

Suppose a business wants to use your services as a contractor. But they only work with companies that provide workers’ compensation insurance to employees.

It happens every now and then as nobody wants to be sued or be liable for employee injuries.

And no business person would want to miss out on business opportunities! Would you?


Where Can Small Businesses Get The Best Workers’ Comp Insurance?

You will have to look into your state laws to determine the best workers’ comp insurance for you.

There are two options when it comes to workers’ compensation insurance.


#1: State-Funded Programs

A state-funded program can be a good choice for small businesses. However, it does not offer the independence of choosing the premium amount you want to pay. State-funded programs have a fixed premium amount that you pay every month.


#2: Private Insurance Providers

You can research the best comp insurance available in your area through an insurance agent or a broker like Insureon. There are many online resources as well! Private insurance providers give you the freedom to choose a premium that fits the best within your budget.


What Do You Need For Workers’ Compensation Insurance Policy?

Getting a quote is easy, but it does require some information from your side, like

  1. Name and description of your business
  2. Social security number (SSN)
  3. Location of your company
  4. Number of employees
  5. Payroll information of your employees
  6. Workers’ comp history
  7. Applicable class codes

What Do You Mean By Applicable Class Codes?

Class codes are three to four-digit numbers used by insurance companies. These numbers are based on the risk level of the employee’s work. For example, an IT employee has a lower risk of work-related injury than a driver. These class codes help classify employees based on the risk they take on their jobs.


To Conclude!

Workers’ compensation insurance can save you from a hefty lawsuit and medical bills! Keeping you from sleepless nights reduces your risk and increases employees’ trust in your company. Indeed it’s a win-win situation for all!

So let’s answer the question we asked in the first place. When a small business needs workers’ compensation insurance? The answer is pretty simple – ALWAYS!  

So, let’s wrap up with this. If you have a question or a suggestion, please drop it in the comment box. Also, let me know what kind of workers’ comp insurance works the best for you.

Let’s discuss!

I am all ears!