Workers Compensation Insurance is mandatory for most businesses. This insurance is a major expense for most employers, but it’s well worth it. There are several reasons why workers comp protects employees and employers.
It’s the Law
Employers need workers compensation insurance if they have more than three or four employees. This number may change depending on the state. Breaking the law results in stiff fines and penalties. Further, a business owner can be prosecuted. Visit paigeandcampbell.com to learn more.
Insurance agencies try to obtain the best rates possible for clients. Businesses don’t have to provide insurance for all workers. Some states exempt certain agriculture businesses from coverage requirements.
Independent contractors, domestic workers, and volunteers are not covered. Comp insurance pays for medical benefits and lost wages. In dire situations, comp pays funeral expenses.
How Insurance Rates are Determined
Insurance rates are based on the number of employees and industry classification. Premiums are higher for risky jobs like logging and construction. In addition, insurance rates were impacted after 9/11.
Insurers know that certain locations may be more vulnerable to catastrophes including natural disasters. These businesses have higher premiums. Workers compensation insurance is similar to other coverages in one way. Companies with the most claims pay more.
Insurance Protects Employers
Businesses that fail to have workers compensation must pay benefits out-of-pocket. Employees can sue the employer without insurance. If the employee’s injury is major, the owner could lose it all.
A lawsuit makes a business vulnerable in many ways. The owner’s wages can be garnished and liens placed on their business and home.
Having a Say in the Claim
Employers with workers compensation have a say in how a claim is handled. Indeed, employers can opt for some form of managed care. An employee’s medical treatment needs to be managed. In the past, unscrupulous doctors would treat clients for months unnecessarily.
Many insurance plans assign a nurse to a claim. The nurse goes to doctor’s appointments and reports back to the insurer. The nurse also renders an opinion on whether treatment and tests are necessary. Likewise, managed care allows insurers to review whether or not employees need specialists. Insurers also offer lower premiums to companies with a managed care plan.
Workers compensation does not cover every injury. It’s common for employers to drug test injured workers. Insurance may not cover an injury where the worker was intoxicated.
Further, employers are not responsible for injuries that are self-inflicted or the result of horseplay. Insurers can also request an independent medical exam or IME. The evaluation is performed by a new doctor and serves as a second opinion.
Employers have certain duties under the law. They must post information about state workers compensation laws. Additionally, they should post a list of acceptable physicians. Remember to give the employee the necessary forms to make a claim and the insurance carrier information.
Employers need to be covered under workers compensation. Many employers take active roles in the company. For example, construction company owners are often on the job site and could be injured. Many health insurance carriers don’t pay for work-related injuries. Therefore, owners need to make sure they’re covered.
The Bottom Line
Workers compensation only makes sense. It’s the American way to protect employees. It would be difficult for businesses to hire and keep the best employees without benefits. Owners should make sure they have the necessary comp coverage.