Accidents can happen, even at the safest businesses. Workers' comp insurance helps businesses and their employees manage the consequences of these accidents.
Workers' compensation is a type of insurance that pays for expenses related to an employee's on-the-job injuries, such as medical care and lost wages. It will also pay death benefits to survivors if an employee is killed on the job. Workers' compensation insurance is required in most states, and must be purchased as a separate policy from other business insurance coverage.
All employers have an obligation to take proper safety precautions and provide a safe working environment for their employees. However, even with adequate safety measures in place, accidents may still occur. These on-the-job employee injuries can be expensive, but workers' comp insurance helps manage those costs for your business.
The cost of your coverage will depend on the type of business you run. High-risk businesses, like roofing or construction, will pay larger premiums than businesses where the risk of employee injury is relatively low.
Not only does workers' comp insurance reimburse an employee for medical expenses and lost wages, but it also protects employers from being sued by an employee because of an accident at work. In turn for giving up the right to sue an employer for workplace injuries and accidents, employees are entitled to receive compensation for those injuries, no matter who is at fault.
All states, except Texas, have workman's compensation laws requiring businesses with employees to have workers' compensation insurance. In Texas, a company that opts not to provide workers' compensation insurance can be sued by employees if it fails to provide a safe working environment.
You may be exempt from workers' compensation laws if:
In some states, businesses purchase workers' compensation insurance from a private insurer. In others, companies may choose from a state-run workers' compensation fund or private options. In North Dakota, Ohio, Washington and Wyoming, businesses must get their insurance through the state-run fund. In some situations, businesses may have the option of choosing "self-insurance," or funding their own workers' compensation plan.
Workman's compensation laws are different in every state. To find out about the specific requirements where you do business, check with the office of your state's insurance commissioner.