Workers’ Compensation Insurance
As a business owner, you naturally want to prioritize your employees’ safety. But no matter how many rules and regulations you implement in the workplace, accidents are bound to happen. When they do, workers’ compensation insurance protects both the company and the employee by covering the costs of a workplace injury.
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Workers’ Compensation Insurance
What is Workers’ Compensation Insurance?
Workers’ compensation insurance is a policy that provides financial coverage in the aftermath of a workplace accident. In every state except Texas, any business with employees is required to have workers’ compensation insurance. It’s paid for entirely by the employer, but it provides financial coverage to both the company and the employee as they navigate the cost of the injury itself as well as the consequences the company experiences while its employee is injured.
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What is Workers’ Compensation Insurance?
What Does Workers’ Comp Cover?
Most people associate workers’ comp with medical costs, but these policies actually provide financial coverage for a fairly wide variety of expenses:
LOST WAGES
If the injured employee is unable to work, workers’ compensation will pay for the lost wages the employee is unable to earn while they’re out of commission. Workers’ comp can replace up to two-thirds of the employee’s standard wage.
PERMANENT INJURY
In severe circumstances, the injured employee may become permanently disabled and unable to return to work at all. In this case, workers’ compensation insurance provides benefits to employees that can no longer work.
EMPLOYERS’ LIABILITY
Even if an incident isn’t a company’s “fault,” it’s very likely that the business will be found liable for bodily injuries sustained on the job. Workers’ compensation protects the business by providing financial coverage for any court settlements and legal fees should the employee decide to sue.
DEATH BENEFITS
In the unfortunate event that an employee passes away as a result of a workplace injury, the company will likely be held liable for the associated expenses. Workers’ comp can cover payments to the deceased employee’s next of kin in order to pay for things like funeral and burial expenses.
RETRAINING
If an injury takes an employee out of work for an extended period of time, they may need retraining in order to reenter the workforce once they’ve recovered. Workers’ comp can provide funds for the employee to obtain this training before returning to work.
What’s not covered?
Workers’ compensation is limited to incidents specifically involving employees. It does not cover:
- Damages to customers or customer property
- Injuries to freelancers or contractors employed by the company
- Harm to equal owners and partners
- Damages to employees’ property
Workers’ comp also does not cover certain employee injuries that are sustained under these circumstances:
- Fighting
- Intoxication
- Intentional actions
- Emotional trauma unaccompanied by physical harm
Who is Workers’ Comp Insurance for?
COMPANIES WITH EMPLOYEES
Just about any business that has employees should have workers’ compensation insurance. In every state except Texas, companies with employees are required by law to have a workers’ comp policy.
COMPANIES WITH EMPLOYEES
Just about any business that has employees should have workers’ compensation insurance. In every state except Texas, companies with employees are required by law to have a workers’ comp policy.
NEW SMALL BUSINESSES
Many small businesses start out as solo operations and then grow later on once demand for the company’s product or service increases. The moment a small business hires even one employee, it must obtain workers’ comp insurance for that employee.
NEW SMALL BUSINESSES
Many small businesses start out as solo operations and then grow later on once demand for the company’s product or service increases. The moment a small business hires even one employee, it must obtain workers’ comp insurance for that employee.
Frequently Asked Questions
To put it simply: yes. The only reason a business should ever forego workers’ comp is if it legitimately has no employees. In most states, companies with even one employee must have workers’ comp insurance. However, some states require it only when you have three to five employees. Although not legally required in Texas, obtaining it is still a prudent decision.
The amount that a workers’ compensation policy pays out to the injured party varies depending on the state you’re in and how much you were making before you were injured. In most states, workers’ comp will replace up to two-thirds of the amount you were making before you were hurt.
Yes, workers’ comp recipients can work light or modified jobs while they’re injured. In this case, it is especially important for employees to comply with their doctor’s instructions in order to avoid violating the terms of their workers’ comp policy.
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