Last updated: November 22nd, 2022
Reviewed by
Grant Desselle
Licensed Insurance Agent
As employers, we have a responsibility to keep our employees safe when at work. This isn’t just for maintaining productivity; it’s also mandated by law, and will go a long way in creating a positive and supportive atmosphere. Which is a win-win situation for all parties involved.
Nevertheless, accidents can still happen at any moment. And so, instead of going through a very messy lawsuit, it’s important to have certain provisions in place. Workers Compensation Insurance is an example of this.
Some businessmen may think paying the premium on this might be unnecessary – and for most companies, it might be. But for those who have workers in high-risk environments, it is totally worth it. Just think of it as an airbag. You hope you’ll never have to use it, though you’re glad that it’s around.
Table of Contents
Definition: Workers Compensation Insurance pays an employee monetary benefits in the unlikely event of injury or disability at work. Employers offer this to workers prior to getting hired, as a way to protect both the business and employee from monetary loss.
Needless to say, it’s designed to safeguard the company, too. Accepting a job with this arrangement in place likewise means the worker waives his or her right to sue their employer in case they get hurt. This is an indirect agreement that they accept all possible risks that come with the job.
In general, also, Workers Compensation Insurance includes, but is not limited to:
As mentioned earlier, companies that utilize high-risk occupations are the primary beneficiaries of Workers Compensation Insurance. And while it’s not a business requirement in all states yet, it is still good to have.
To provide greater clarity, here are some examples of businesses that this is for.
On the other hand, not all jobs have a need for this type of insurance. Offering this to office clerks, secretaries, or even salespeople isn’t exactly bad, but it isn’t necessary either. Executives, likewise, won’t have any use for it. They’ll appreciate having medical or dental benefits instead.
Of course, any application for Workers Compensation Insurance needs to still be assessed by the provider. Your business industry and the type of work each employee does are just a few things taken into account. So it isn’t a sure thing yet. Here are some considerations that might result in disapproval, or at least get you to pay a higher monthly amortization fee.
Computing for this is done on a case-to-case basis. There are several factors that affect how much a plan costs. Because in the end, insurance agencies want – and need – to make money, too. So for your information, here are some things to look out for.
The relationship between an insurance agency and its customer is considered a partnership. Both parties mutually benefit from this partnership, achieving financial security and peace of mind in the process.
You probably already heard stories about employers going bankrupt after getting sued for negligence or paying thousands of dollars worth of medical bills. And this is exactly the outcome that Workers Compensation Insurance hopes to prevent.
Of course, insurance companies need to earn a profit as well. They do this through the monthly payments their clients make, which do not result in a claim. A commission is paid to each agent involved, while the rest is kept by the entity, for pooling together.
Each time a policy-holder is involved in an accident at work, they are entitled to monetary benefits, depending on the stipulations of their plan. Now, remember, it’s only in certain situations that a claim can be made.
Ultimately, as with any contract entered into by two sides, communication is key. So when you have plans of registering for Workers Compensation Insurance, make sure to clarify every single detail, ask anything that might still seem vague, and expound on your needs. Remember, you can never be too prudent with these types of benefits.
Purchasing Workers Compensation Insurance can be daunting, even mind-numbing at times. So here are a few important notes to remember.
Medical Coverage – It covers hospital bills, medicine, doctors consultations, and other forms of additional treatment. This may also include any other rehabilitation cost that might be needed.
Lost Wages – Whenever an employee isn’t fit to work, technically speaking, he or she isn’t technically eligible to receive a salary. But thanks to this, they can collect a portion of their pay (or even in full, depending on the policy) while recovering.
As an add-on, companies may choose to include the following provisions. There are extraneous conditions that might be better suited for specific industries only. Of course, this will come with corresponding charges.
Repetitive Injuries – Jobs like stockmen or porters, who regularly carry heavy items, can take a toll on a person’s body. This leads to chronic back and shoulder injuries, as well as other parts of the body. Having Workers Compensation Insurance will allow them to seek help immediately, instead of having it linger for longer periods.
Grave Illnesses – Contracting a serious ailment like COVID-19,. and this risk drastically increases when in a confined space or traveling from one place to another.
High-Risk Jobs – Occupations that require members to be placed in threatening situations aren’t covered. But they can always be added on. With the higher likelihood of getting hurt, this type of insurance is extremely useful. Just be prepared for the added expenditures.
This might take a longer time to process, but it’s not usually an issue. However, it is still best to consult with a lawyer to clarify this.
Choosing the best Workers Compensation Insurance is never easy. With so many choices available, this task can be overwhelming. What might help, though, is following these quick tips, and zeroing in only on what’s important.
After getting those in order, you can also choose based on the following conditions.
Insurance companies usually conduct a site inspection prior to submitting a proposal. They do this primarily to assess risks, observe day-to-day practices, and identify potential problem areas in a company’s operations.
However, more and more providers are offering online options, too. All you need to do is submit your company information, the industry you’re operating under, and you’ll get a quote within minutes.
In terms of savings, businesses pay less for Workers Compensation Insurance by putting the following measures in place:
Finding the best possible providers can be done through an online or offline search. Read through reviews to see what other people think about a particular provider. If you are already working with an existing insurance company, ask them for referrals, too. Being in a similar industry, their recommendation might help get you a better deal.
Once you have a list of potential suppliers, search each one online and read through reviews. This is a good way of weeding out reliable options from bad ones.
Then, simply set up a meeting to know more about them.
Naturally, it’s important to conduct your own background check. Remember, insurance agents will always put their best foot forward. So it’s important to do your own background check, too. Here are some resources you can look into:
Before arriving at a final decision, you will be undergoing a lot of negotiations and back-and-forths. To ensure smooth conversations, here are some things to remember.
Here’s a simple step-by-step guide of what you need to do before arriving at a final decision.
Finalizing the Workers Compensation Insurance plan for your employees is never easy. But it’s something most businesses need to have. But your needs always need to come first. So, make sure to spell that out to insurance agents.
And when you’re choosing among several options, never sacrifice quality for a lower price. Workers Compensation Insurance for your small business is important to safeguard your employees’ welfare, too.
Brian is the founder and CEO of Insurist and carries Life, Health, and Property & Casualty licenses in all 50 U.S. states. Since 2013, Brian has been a member of Million Dollar Round Table, a designation for the top 1% of financial advisors worldwide. Brian has been featured in Yahoo! Finance, Money.com, Entrepreneur.com, Life Happens, Forbes, MSN, and Good Financial Cents. Brian’s goal is to show customers the best products, the quickest answers to their questions, and provide expert advice.
Grant's past experience includes work as a licensed sales agent for Hagerty Insurance. He has reviewed thousands of existing auto policies across the nation and issued hundreds of new ones on everything ranging from classic cars undergoing restoration to modern exotics and motorcycles.
