Workers Compensation Insurance Explained: Everything Small Business Owners Need to Know

June 14, 2023

Workers Compensation Insurance Explained: Everything Small Business Owners Need to Know

No matter the industry, accidents can occur in the workplace. Workers' compensation insurance -or "workers comp"- prevents situations from becoming overwhelming for businesses and their employees by covering wages lost due to illness or injury, medical expenses related to recovery efforts, and vocational rehabilitation programs should extended care be needed after an incident takes place on-site. It can also cover death benefits like funeral costs if a worker passes away during work-associated activity.

Workers' compensation shields you and your workforce against many risks:

✅ Missed wages coverage for employees needing time off due to illness or injury

✅ Medical expenses to treat injured or ill employees

✅ Vocational rehabilitation for those in need of ongoing care to help them return to work

✅ Death benefits, including funeral costs, for work-related incidents

Workers Comp

State-Specific Workers' Compensation Guidelines

Each state runs its own workers' compensation program, meaning laws and requirements can vary depending on where your business operates. Premium amounts and benefits are set based on the respective state's economy and the risks associated with the job.

Additionally, each state determines who can sell and handle their workers' comp policies, including state-run agencies, private insurance companies, and even the state itself. In addition, certain states also offer secondary injury funds to help cover disabled workers who may be at a greater risk for re-injury. Without secondary injury funds in place, employers may be hesitant to hire workers who have been injured before.

What injuries are covered by Workers' Comp?

Workers' compensation can provide necessary assistance when one of your employees suffers an injury on the job or while working on your behalf. Whether a traffic accident was encountered during delivery or a physical injury sustained on the worksite, your employee's medical expenses can be covered. Workers' comp can also provide reimbursement for costs resulting from work-related violence, terrorism, and natural disasters.

Uncovered Risks in Workers' Comp Insurance

Knowing what your workers' compensation insurance does not cover can help you avoid major losses. Some situations typically excluded are injuries or illnesses caused by an employee's fighting, intentional harm, intoxication, emotional distress, or an accident during a commute. Also, your policy won't step in if an employee brings a lawsuit against your company for gross negligence, discrimination, malicious intent, failure to promote, or wrongful termination. Instead, stay informed and protect your business from unexpected claims by understanding your workers' comp limitations.

Who needs Workers' Comp?

Workers' compensation insurance is a mandatory requirement for most states across the United States. However, Texas is an exception, and it becomes optional for businesses to obtain workers' comp there.

Moreover, certain businesses might qualify for an exemption from their state's workers' compensation laws, subject to their worker status and the type of work they are engaged in. Examples include commission-based employees, specific real estate agents, family members employed in the business, part-time workers, volunteers, and those who work in exchange for food.

Let RG Insurance help you get started with a custom business insurance quote that is tailored to your specific level of risk! Come visit us today or request an online quote, and let us help you find the right coverage at the best price.

Follow RG Insurance for more helpful insurance content!

Home - Life - Auto - Business

Facebook | Instagram | LinkedIn

Request an Insurance Quote

Get your Instant Quote Today
Discover how much better insurance can be by working with the RG Insurance team.