If an employee is injured or develops an illness while doing their job, it is usually the business owner who is considered liable. Sometimes even the most well-meaning business owners might unknowingly put their workers in damaging situations. Moreover, some conditions, like carpal tunnel syndrome, develop gradually and can be hard to completely avoid.
Larger companies might be able to cover the medical bills and offer compensation entirely out-of-pocket, but smaller businesses might go bankrupt if it is a serious case with expensive treatment and long recovery. To avoid the situation where the compensation is going to be more than you can afford without going under, you need workers’ compensation.
Workers’ compensation insurance, also known as workers’ comp, covers medical and wage benefits to employees who become ill or injured at work. The policy is widely considered a social insurance policy, as in essence, it is a contract between the management and the labor force.
By purchasing workers’ compensation insurance, business owners protect themselves from any civil lawsuits their workers could file to be compensated for an injury on the job. Irrespective of who was responsible for an accident, the policy compensates the workers. Most policies will also cover death at the workplace, providing atonement for the deceased worker’s dependents.
Workers’ compensation insurance is governed by state law. However, most states have some kind of statute regarding the requirement to hold workers’ compensation insurance. To learn more, you need to check your state legislation. Additionally, federal workers are governed by federal programs.
State laws will determine the number of benefits employees are entitled to, what injuries are covered, how they are to be evaluated, and how medical care is delivered. Furthermore, states decide if workers’ compensation is provided by private companies or state-run agencies. The state legislature also lays out the way claims should be handled and disputes resolved.
Every business owner is legally obligated to keep complete and up-to-date records of accidents that involve their employees. Any work-related accident must be reported to the workers’ compensation state board and the insurer within a specified period.
Anyone who is not an owner or a partner is an employee and should be covered under workers’ comp.
However, immediate family members of the business owner may not be considered as employees. This includes parents, spouses, and children. More distant family members, such as siblings and in-laws, can be regarded as employees. These rules can vary from state to state.
Finally, contractors and subcontractors provide an interesting middle ground between employees and a separate business. Some states regard independent contractors as employees, some do not. An uninsured contractor, subcontractor, or an employee of an uninsured subcontractor is usually seen as an employee.
If your employee falls ill at the workplace or gets a work-related injury, workers’ compensation insurance is used to financially cover their recovery. However, the event must be related to their work or workplace directly. Driving to and from work is not covered, whereas driving to deliver something as part of one’s job responsibilities is. Getting sick due to a faulty work environment, e.g. being exposed to asbestos, is also covered.
The policy will cover their medical treatments as well as lost income. Some states require the benefits to be paid for the entire duration of the disability, while other states specify a limited time frame. Typically, the benefit provided is calculated as a percentage of the worker’s weekly wage, either based on their personal salary or state average.
Although workers’ comp can save you money over time, it can seem like a costly investment at first. There are several things you can do to reduce the costs:
If you want to discuss your options with an insurance expert, send us an email, give us a ring, or fill out the free quote form on our website.
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