Workers’ compensation insurance provides medical care and wage replacement benefits to employees who become injured or ill due to work-related incidents. It covers medical expenses, lost wages, rehabilitation costs and death benefits. Workers’ comp insurance is mandated by law in all 50 states and must be carried by nearly all employers. Even if you have just one part-time employee, you are legally required to carry a workers’ comp policy in most states.
Data from the National Council on Compensation Insurance’s (NCCI) shows that motor vehicle crashes accounted for $90,914 per worker’s compensation claims between 2021 and 2022. Burns were the next most prevalent claim, followed by falls/slips. Workplace injury claims averaged $120,077 per workers, with head or central nervous systems the body part most likely to be affected in a worker’s comp claim.
Who Needs Workers’ Comp Insurance?
If you have any employees, including part-time, temporary, seasonal, family members or minors, you need workers’ compensation insurance. The only exception is if you are a sole proprietor with no employees. Otherwise, you must carry this policy to comply with state laws and protect your business. The only opt-out states are Texas and Oklahoma, where participation is optional. However, even in these states, it’s highly recommended you carry coverage to avoid lawsuits. Workers’ compensation attorneys will work hard to ensure their clients receive the compensation benefits they are entitled to in the event of a workplace accident.
How Much Does Workers’ Comp Cost?
Workers’ comp premiums vary widely based on your industry risk class, state, payroll size, claims history and policy options. On average, rates range from 1% to 15% of payroll for small businesses. The type of work you do is the biggest factor in determining your rate. For example, office workers have lower premiums than construction workers due to the higher risk and frequency of claims. Talk to an insurance agent to get a customized workers’ comp quote for your business based on your unique risk factors.
Benefits for Business Owners
While workers’ comp premiums are an additional business expense, this insurance coverage provides valuable protection for your company. The main advantages for employers include:
- Covers employee injuries/illnesses no matter who was at fault
- Prevents costly litigation and protects you from employee lawsuits
- Satisfies state legal requirements
- Your premiums pay for claims and legal expenses
- Covers medical and disability costs for injured employees
- Allows you to focus on your business instead of handling claims
Protect Your Business
Workers’ comp insurance is a critical coverage that nearly every employer must carry by law. Failure to provide workers’ compensation coverage for more than five employees will attract fines of $5k-$50k. It’s also a class E felony.
Make sure you understand the requirements in your state and work with an insurance agent to put this policy in place. It will protect your business financially in the event of an employee injury or illness and demonstrate to your team that you care about their well-being on the job. Don’t risk going without workers’ comp – the consequences simply aren’t worth the potential savings. As a responsible business owner, you need to protect your company and employees.
