Workers Compensation Insurance

Workers compensation requirements began early in the 20th  in the United States. Every business in the United States that involves employee has to consider a workers compensation policy. Most states require employers to purchase an insurance policy to handle their obligation towards workers who are injured or due to workplace exposure.

Before the policy and insurance, workers who’d been injured or made ill on the job had to take legal action against their employers. Results were horrible since system simultaneously made it difficult for workers to obtain compensation for such injuries and exposure of employers to potentially devastating financial penalties.

Modern Compensation Insurance

Workers compensation is an insurance program set up to provide workers who were injured on the job benefits to make up for lost wages while they’re out taking care of their injury.

Some of the areas which Compensation insurance covers:

  •    Injuries caused at work, like repetitive motion injuries
  •    Injuries or loss of limbs
  •    Medical treatment
  •    Illnesses, like emphysema
  •    Rehabilitation needed so employees can return to work
  •    Lost wages (up to two-thirds of the employee’s salary)
  •    Death
  •    Liability insurance for the company for lawsuits filed by injured employees

This might look like an annoying business expense. But offering workers compensation can protect you from litigation if an employee becomes injured or sick as a result of the job. Every state but Texas requires companies to carry workers compensation insurance- either through a private insurer or the state or, the business can elect to be self-insured. The cost for workers compensation insurance depends on the industry and the provider(high-risk jobs like construction and roofing have premiums). The company’s premiums can either increase or decrease depending on the number of claims filed.

Business owners can reduce claims and lower premiums by:

Offering safety gear, accessing the safety of the work environment, providing friendly office equipment, creating a safe work environment by training all employees on workplace safety, offering updates and tips on workplace safety, getting injured employees back to work faster, Developing wellness program to encourage healthy living and fitness, which should reduce the number of employees injured on the job.

Cons and Myths

Once the worker’s compensation has been paid, it’s over with the employer responsibilities. Staying in close contact with your employee,  during the recovery phase, as a business owner you can better gauge when the employee can go back to work. Only larger business are required to carry workers compensation insurance. Not True. In many states, a company needs to have one employee to meet the requirement for workers compensation.

Type of business can also be determining factor. In Missouri, the law states that the minimum of five employees is required for minimum coverage, but if that company is in the construction industry, the minimum is one employee. Compensation fraud is not that common. Studies have shown that only 1 to 2 percent of claims are fraudulent. Insurance companies often fuel media claims.

The national price tag is around $1.2 billion annually for Compensation Insurance.