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    Workers’ Compensation Insurance

    As a business owner, it is not enough to put profits in mind when decisions are made. The people working for the business is one of its most important resources, so employers must put their welfare into consideration by thinking of the working conditions of their employees. Here is where workers' compensation insurance comes in.

    worker's compensation

    The importance of getting employees insured will offer safety from any injury, which is important no matter what industry a business is in. A workplace injury can occur at any time, so an employer must do their part in making their place ideal for employment.

    In 2019 alone, 888,220 workers suffered from job-related injuries and illnesses from the workplace. Most of these employees are laborers, drivers, nurses, nursing assistants, retail workers, construction workers, and cleaners. It's these workplaces that are more prone to injury.

    But regardless of policies seeking worker safety, accidents can happen at any time. Whether it's something as intense as vehicular accidents or slips and falls, an employer can protect their workforce much better with workers comp coverage.

    What Is Workers' Compensation?

    Workers’ Compensation

    Workers compensation insurance is a program mandated in all US states, with minimal exceptions, that focuses on providing workers compensation benefits in case of a work-related injury or illness. This coverage is also known as workman's comp, comp insurance, and workman's compensation.

    The overall goal of workers comp insurance is to help injured employees recover without having to worry about their day-to-day needs and rehabilitation costs. An injured employee will be able to receive missed wages, medical expenses, rehabilitation, therapy, and death benefits.

    However, worker's compensation is also linked to mandates and programs set by the government. Depending on the state, there might be publicly available funds for underwriting workers' compensation insurance, and private insurance carriers are restricted from covering workers' comp.

    Why Do Business Owners Need To Provide Workers' Compensation?

    If a business has one employee aside from the owner, they are immediately mandated by law to provide worker's comp insurance. First of all, if a business fails to get workers compensation coverage on time, they can expect penalties to pile up and in worse cases, the state can cancel their business permit, have them shut down, and even get the owners imprisoned.

    Aside from this, an employer needs to get workers' comp as it provides protection for the business against possible lawsuits from its own employees. Also, worker's comp will protect business owners from shelling out cash directly for their employees. Depending on the extent of the damage, a significant financial loss can really hurt a company.

    On the other hand, worker's comp is beneficial for employees too. Employees usually don't have extra money for medical expenses nor enough savings to sustain their life's needs while they cannot work.

    The Average Cost of Workers' Compensation

    Workers’ Compensation

    The total cost of workers' compensation depends on several factors. First, in the world of workers' compensation insurance, the rates are affected by programs as set by the state.

    Aside from these things, workers comp follows a formula to get the premium. This is the payroll divided by $100, multiplied by the class code rate and the experience rate modification.

    However, the resulting amount will still remain a ballpark figure. The average cost will still be influenced by various factors, most especially, the following:

    Location

    Workers' compensation statutes are regulated at the state level. Therefore, the state laws will be the ones dictating the costs of workers' liability insurance. To identify the actual information set by each state, you can check out the state workers’ compensation map on the Department of Labor's website.

    Industry and Type of Work

    The National Council on Compensation Insurance (NCCI) is an independent organization that conducts research on different businesses in the US. The NCCI assigns the class code depending on the industry the business belongs to and the kind of work done by the employees.

    Number of Employees

    Just like other insurance coverage for businesses, the number of employees in the company affects the overall cost of the premiums. For worker's compensation, in particular, the emphasis is heavy on how big your payroll actually is because the amount will be used in the computation of the formula.

    History with Claims

    Workers’ Compensation

    Insurance companies look into the history of employers before they set their rates. To identify this number, these insurance providers use something called experience modification factors. The average number is 1.0. Those who score less than 1.0 get smaller premiums, while those employers who score higher tend to get 1.0.

    For new businesses, the novice employer will not have any claims history to provide them with this number. Therefore, their formula won't include an experience mod to factor in.

    Frequently Asked Questions About Workers' Compensation

    What does workers’ compensation cover?

    Workers' compensation insurance covers expenses connected to a work-related injury or illness suffered by an employee. Workers compensation coverage extends to the following:

    1. Medical expenses - This includes emergency room visits, prescription medicine, cost of surgeries, and other medical benefits.
    2. Lost wages for missed work - Somewhat like unemployment benefits, this coverage replaces the income they should be receiving if everything was normal and they were not injured on the job.
    3. Ongoing care - There are work-related injuries that cannot be healed in a single visit. For a job-related injury that requires rehabilitation and physical therapy, workers' compensation plans extend to these additional treatments.
    4. Funeral costs - If an employee loses their life while they are on the job, workers' compensation laws can help cover the costs of their funeral and provide benefits for the family of the deceased.
    5. Illness - For some industries, working conditions get the employee exposed to allergens or harmful chemicals that lead to illness.

    What is not covered by workers’ compensation?

    Though workers' compensation insurance covers most workplace injuries, it cannot cover them all. The coverage's benefits cannot be provided in situations like the following:

    1. Injuries from an employee starting a fight
    2. Injuries by an employee committing a serious crime
    3. Injuries suffered by employees while they are not on the job
    4. Any injury suffered while an employee is in violation of company policy

    If an employee is receiving workman’s comp benefits, are they eligible for disability, unemployment, or social security benefits?

    An employee can be eligible for these benefits despite having access to workers comp. However, the extent of these extras an employee can enjoy can be lessened because of the coverage provided.

    For the specific details, an employee can talk with their company's human resources department to discuss other benefits beyond their worker's compensation claim and the filing process for disability, social security, and unemployment benefits.

    Providing Workers' Compensation

    Every business needs to have good workers' compensation coverage, not only to care for their employees but to stay within the requirements of the government. As workers being injured on the job is something that cannot be avoided, being prepared for the possibility will be an employer's best practice.

    Do you have questions about workers' compensation insurance? Let us help you! Contact Assured Standard today!

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