What workers compensation coverage means for your business

Every employer wants to provide a safe, healthy workplace for their employees. But accidents can happen, and illnesses can be unavoidable. To protect employees from the financial consequences of being injured, becoming ill, or even dying on the job, workers compensation coverage is mandated in most states for most businesses that have employees.

What is workers compensation coverage?

Workers comp coverage protects employers and employees from the costs associated with job-related accidents or illnesses. It pays for medical expenses, rehabilitation costs, and a percentage of the employee’s wages for the time they are unable to work due to injury or illness. If an employee dies while working or from a work-related cause, workers compensation insurance pays a death benefit to the worker’s family.

What does workers compensation insurance cover?

Workers compensation insurance covers medical expenses and lost wages if an employee gets hurt, becomes ill, or dies on the job. It covers the cost of medical care and medical treatment for injuries and illnesses suffered while working or because of working conditions. It replaces most of the wages that a worker would otherwise lose because they are unable to work while they recover. If the worker cannot return to work or cannot return to work in the same capacity, workers' compensation insurance may provide disability benefits. If a worker dies due to a workplace accident or illness, workers compensation insurance may pay death benefits, including paying the cost of funeral expenses, to the worker’s family. 

Do I need workers compensation insurance?

In the vast majority of cases, if your small business has employees, you need workers compensation insurance. Some states require it only if you have a certain number of employees. For example, employers in Arkansas only need coverage if they have three or more employees. In Massachusetts, workers compensation insurance is required no matter how many employees you have.

If you are a sole proprietor, you are likely not required to have workers compensation insurance, although you can still purchase it to protect yourself in case of a job-related injury or illness. Likewise, for partnerships that have no employees who are not owners, coverage is optional.

If you’re not sure if you need workers compensation insurance, ask yourself these questions.  

• Are you about to hire your first employee?
• Do you have one or more full-time employees?
• Do you have one or more part-time or seasonal employees?

If you answered yes to any of these questions, then your business needs workers compensation insurance. 

Specific workers compensation insurance requirements can vary from state to state. You can find information on your state’s requirements by Googling {State Name} Workers Compensation Insurance.

Is a 1099 employee covered by workers compensation?

Many businesses hire employees under 1099 contracts. In general, these types of employees are not protected under a workers compensation policy because 1099 employees are technically self-employed. However, the guidelines vary by state.  

If you are self-employed and operate under a sole proprietorship, you may want to get workers compensation insurance to cover any injuries you may sustain on the job.  

For instance, take a mechanic who works for themselves. If they sustain an injury on the job, their health insurance could deny the claim, deeming it a work-related incident and thus not covering any medical bills. The mechanic is on the hook for any medical bills if he or she doesn’t have workers comp insurance. Their workers compensation insurance could also pay a percentage of the income the mechanic would have made during the time they are out of work, recovering from their injury. 

How much does workers compensation coverage cost?

Your employees are important to you, so you don’t want to cut corners with the insurance protection you provide for them. On the other hand, you don’t want to pay more than you have to. The cost of workers compensation insurance coverage varies depending on several factors, including:

• the type of business you are in
• the number of employees you have
• your total annual payroll
• the state you are located in
• your prior claims history.

To find out how much workers compensation insurance may cost for your company, get a quote now.  

What to look for in a workers compensation insurance policy

Workers compensation insurance policies have certain requirements, but there are a few things that differentiate them. Here’s what to look for when choosing a policy.  

Provider network

If a worker is injured on the job, workers compensation insurance can pay for the worker’s medical care. Make sure your carrier has the right specialties in the right geographic region. You want your employees to be able to access the care they need in a timely manner and from a nearby provider. 

Payment options

Some workers compensation policies require a large deposit, and, since pricing is partially based on payroll, they require periodic audits of your payroll. Others offer pay-as-you-go pricing, which doesn’t require a large deposit or makes payroll audits much easier.

Reliable carrier

Any workers compensation policy is only as good as the company behind it, so be sure the provider you choose will be around if the time comes when you have a claim.  

When should a workers compensation claim be filed?  

The short answer is, immediately. In order to protect yourself and your employees, it’s best practice to notify your insurance carrier the moment you think you have a workers compensation claim on your hands. If you’re not sure if an incident qualifies as a workers comp claim, check out these examples of workplace injuries.

You can purchase workers compensation insurance on the Hiscox website in just minutes. Get a fast, free quote today and protect your business and your employees.