Most new employers do not understand workers’ compensation insurance. They have questions about what it does, why it’s necessary, and how it protects them and their employees.
What Is Workers’ Compensation?
Workers’ compensation is a type of insurance designed to cover the expense of medical care and rehabilitation for employees who are injured on the job. In some cases, it will also cover lost wages. Having workers’ comp insurance protects a business because employees no longer have the right to sue their employer for negligence.
Employees benefit because they know that if they are injured on the job, they will get work-related compensation without needing to file a lawsuit. If an employee has their workers’ comp claim denied, they may wish to talk to a Pocatello workers’ compensation lawyer or one in their area who can provide them with valuable assistance in getting their claim accepted.
Do Small Businesses Need Workers’ Compensation Insurance?
Yes. Just about every state requires that businesses with employees have workers’ compensation insurance. Even in states, like Texas, where workers’ comp insurance is not required by law, many businesses still carry it because other businesses will refuse to work with them unless they have it.
The fines for not having workers’ compensation insurance are very expensive. Self-employed individuals and some agricultural businesses are not required by the state to purchase workers’ comp insurance, yet many do to avoid financial liability.
Does the State Provide Workers’ Comp Insurance?
No. Workers’ comp insurance is not provided by the state but instead must be purchased in the private market. The options available for workers’ comp insurance vary by state and by provider. The law requires that business purchase workers’ compensation insurance as soon as it has one or more employees who are not partners in the business.
Is Workers’ Comp Insurance Expensive?
The cost varies by state and is determined by the workers’ compensation board of the state. Most boards use the formula classification risk multiplied by 1 percent for every $100 an employee makes. Simply put, this means that different jobs have different risk classifications based on the likelihood that a person will get injured on the job and the severity of said injury. Each classification is assigned a dollar amount based on the risk associated with the job. So in a job that has a risk classification of $1.25, they would pay $7.50 every week for an employee who makes $600 a week.
A business’s premiums will fluctuate depending on the safety history of the business, if they offer health insurance, and other factors.