When you’re starting a business, there are a million different things to think about. Business license, hiring, premises, billing, payroll, taxes, and on and on. But one important issue you can’t overlook is that of workers’ compensation.
Workers’ compensation protects not only your employees but you as well. Read on to learn more about this coverage and why you need it.
What Is Workers’ Compensation?
Workers’ compensation is insurance that protects you from liability if your employees are injured on-site. Without workers’ comp, you could be on the hook for all of their medical bills or even damages from a wrongful death lawsuit. This system also provides benefits to your employees to help cover the cost of their injuries.
Workers’ compensation generally covers things like lost wages, medical bills, and other expenses related to their injury. Many mid-sized and large businesses know that they are required to have workers’ comp. But some small business owners may not realize that you, too, may need workers’ comp.
Why You Need It
The biggest reason you need workers’ comp is that many states require employers to carry it. Regardless of the size of your business or your industry, in some states, as soon as you hire your first employee, you have to provide workers’ comp. Failing to do so could not only bankrupt you through medical bills and lawsuits, but it could also result in legal penalties and fines.
But aside from the legal ramifications, workers’ comp is a way to protect both yourself and your employees. Your employees will get the care they need to recover well from their injury and return to work. And you get protected from heavy lawsuits and gain the respect of employees who know that you take care of them.
What Coverage You Need
Workers’ comp policies offer a wide variety of coverage options, but there are some that you will need to have, depending on the size of your business and your industry. For instance, if you’re a large company in a high-risk industry such as construction, you may have to pay higher premiums and get the most coverage you can manage to. But if you’re a small office-based business, you may be able to manage a lower-price, lower-coverage plan.
Something many self-employed business owners may not realize is that they might need to get coverage for themselves. This might sound odd, but it can come in handy. Think of it as a sort of additional form of accident and injury insurance; if you’re injured on the job, you’ll have a policy in place to help cover some of your expenses.
In addition to regulating whether employers must have workers’ comp, some states have regulations regarding how employers must report claims. For instance, in Florida, employers have to report claims to their insurance company within a week of being notified of the accident or injury. These laws also determine what penalties follow if you fail to comply with regulations.
If you have employees in multiple states, your workers’ comp regulations may be more complicated. Each state has its own individual workers’ comp programs, but these states also have agencies designated to these programs. If you’re confused about a certain state’s requirements, reach out to their agency for guidance.
Reporting a Claim
There are some general rules of thumb for reporting a claim across all states. In general, it’s a good idea to report a claim to your insurance as soon as you can after finding out about it. No one is going to punish you for reporting too early, but there may be consequences for reporting too late.
The other reason to report a claim as soon as possible is to get responsibility for handling it out of your hands. As soon as you report that claim to your insurance agency, they will take over everything from managing the injured employee’s care to hiring a lawyer should that employee try to sue. Your only job is to give them any information they ask for and cooperate fully with the investigation.
Once you report a claim to your insurance agent, they’re going to launch an investigation into the injury to determine how much of that employee’s care they have to cover. For you, cooperation is going to primarily mean handing over documentation of the injury or accident. If you don’t already have policies in place for documenting these accidents when they happen, you need to set some up immediately.
You or your insurance company may also want to run a drug test as part of the investigation to ensure the worker wasn’t impaired at the time and thus responsible for their own injury. Different states have different laws about when and how these tests can be used, so be sure to check on that. It’s a good idea to outline your drug testing policy as clearly as possible in your employee handbook to make sure you can run whatever tests you have to after an accident or injury.
What Isn’t Covered
Workers’ comp can protect your business in a number of accident-related lawsuits, but it isn’t a blanket protection. These policies cover only certain types of lawsuits, depending on your specific state regulations. So you need to be aware of which scenarios aren’t covered and take special care to protect against those.
One of those steps to protect yourself may include getting employers’ liability insurance. This can help you pay for legal fees, court costs, and any settlements. You may want to consult with a workplace insurance expert before you hire your first employee to make sure you have all the coverage you need.
Learn More About Workers’ Compensation
Workers’ compensation is an important protection for your company to have. It makes sure you aren’t left holding the bill for drastic medical procedures or expensive lawsuits. Make sure you’re familiar with workers’ compensation laws in your state so you can stay both protected and in compliance with the law.
If you’d like to make sure your business is doing everything it needs to in order to be successful, come see us at GIGA Solutions. We are here to help your professional employment organization reach its full potential. Contact us today to start making the smart decisions for your business.