What You Need To Know About Workers Compensation Insurance

If you are a bit fuzzy about what workers compensation insurance is and whether or not you need it I highly recommend the article below.

Article first appeared in Entrepreneur magazine. To see the full article go here: https://www.entrepreneur.com/article/79594


Almost every business in the United States that has employees has to handle the problem of workers' compensation. Most states (with a few important exceptions) essentially require employers to purchase an insurance policy to handle their statutory obligations to workers who are injured or made ill due to a workplace exposure. Whether your business is small or large, handling the expense and effort of meeting those statutory obligations is an ever-present challenge.

If you are a one man shop or a small business you may not even realize you are required by law to have a worker compensation insurance policy in place. Be sure to always with your specific state guidelines.

Whether working with a small machine shop that employs 30 people or a Fortune 100 corporation that employs thousands across many states, I've found that the details may vary but the concern remains the same: how can the voracious cost of workers' compensation be controlled effectively?
Some researchers have suggested that the earliest roots of workers' compensation can be traced back to the code of Caribbean pirates: those who were injured plying their dangerous trade would be compensated with shares of booty taken by their able-bodied fellow buccaneers. Colorful as that conjecture may be, workers' compensation requirements in the United States began early in the 20th century, back in 1911.

For ages, employers and employees have struggle to find a way to protect both their businesses and employees in the event of an injury.

Today, modern workers' compensation laws provide fairly comprehensive and specific benefits to workers who suffer workplace injury or illness. Benefits include medical expenses, death benefits, lost wages, and vocational rehabilitation. Failure to carry workers' compensation insurance or otherwise meet a state's regulations in this regard can leave an employer exposed not only to paying these benefits out of pocket, but also to paying penalties levied by the states.

Workers' Comp--Who Needs It?
That may be the first important question that a business needs to address, because not every business is required to purchase workers' compensation insurance. Generally speaking, sole proprietors and partnerships aren't required to purchase workers' compensation insurance unless and until they have employees who aren't owners. Most states will allow sole proprietors and partners to cover themselves for workers' compensation if they choose to, but it isn't required. (An important note, though-these rules vary from state to state and can change over time. So it's always a good idea to check with your particular state's regulatory agency to make sure what the rules are for your state jurisdiction.)

While at first workers compensation insurance may seem like an unnecessary expense, after further investigation you'll discover that your business could cease to exist without it.

To learn more about workers compensation be sure to check out the complete article.
Source: https://www.entrepreneur.com/article/79594