What Is Workers’ Compensation Insurance?

August 08, 2019

A wise person once said, “You gotta crack a few eggs if you’re gonna make an omelet”, meaning, accidents happen. Even if you have a team of world-class omelet makers, not every chef can cook mistake-free forever.

That being said, before a mishap leaves you and your business covered in yoke, you should make sure all your employees are protected. The Stanford Agency will walk you through your options to find the right plan that will help both sides recover from an egg-cracking accident.

What Is Workers’ Compensation Insurance?

Basically, it’s a contract between a business and an insurance company, where the insurer will pay for an employee’s medical costs, lost wages, permanent disability or death benefits that result from a workplace injury or illness. In most cases, it also protects a business against lawsuits filed by employees.

Is Workers' Comp Mandatory?

Yes. There are some exceptions, but even if it isn't mandatory, a worker’s comp policy is HEAVILY recommended. You wouldn’t want one little whoopsie to crush your big business dreams, would you?

Why Do I Need Workers' Comp?

If an employee were to injury themselves, workers' comp can save your company from crumbling to the ground in a number of ways, but if you like living on the edge and fail to provide adequate coverage you could face a giant world of hurt.

Bad things that can happen if you don’t have workers' comp insurance:

  • Financial ruins: without an insurance policy, out-of-pocket expenses for a severe injury could bankrupt your company
  • Legal issues: without coverage, you lose certain types of common law defenses, which make it nearly impossible to win your case
  • Criminal charges and fines: failure to comply with state regulations could lead to hefty fines and even jail time. Jail. JAIL!

What Does Workers' Comp Cover?

A workers' comp insurance policy will cover the majority of injuries that arise from work-related duties, ranging from simple slip-and-fall accidents to repetitive motion injuries and even an illness or disease contracted at work.

Employee coverage will usually include the following:

  • Medical bills and rehabilitation costs
  • Weekly payments in place of missed wages
  • Compensation for past, present and future economic loss due to disability

If an employee dies, their family will usually receive the following:

  • Compensation for funeral costs
  • Legal fees (if the family sues)
  • Death benefits

Workers' Comp Insurance for a Small Business

Coverage will be determined by your corporate structure and the regulations of the state’s workers' compensation rating authority, but it typically depends on the number of employees, type of business, type of work the employees are doing, among other things. Even if it’s not required, it’s relatively inexpensive and well worth the protection it provides. Protect yourself, by protecting others.

Workers' Compensation Laws by State

Each state, has its own rules, regulations, coverage requirements and everything in between—they pretty much run the show.

What’s So Great About an Independent Insurance Agent?

It’s simple. Literally. The Stanford Agency will simplify the process by shopping and comparing insurance quotes and rates for you. Not only that, they’ll cut the jargon and clarify the fine print so you know exactly what you’re getting.

Plus, they work with multiple workers' comp insurance carriers, which gives you more options for finding ideal coverage that complies with state regulations. Most importantly, they’ll be there to help you when claim time comes. The outcome of insurance claims can be strongly impacted by how the process is approached and handled. They've got your back!

How Much Does Workers' Compensation Cost?

The cost of a workers' compensation policy depends on the coverage and a number of other factors like state regulations and industry. So, an ergonomically-conscious accounting firm might less than $1,000 a year, whereas a traveling circus could pay significantly more. Basically, the safer and smaller the company, the cheaper it is.

How Can You Get Lower Workers' Comp Insurance Rates?

First, take steps to manage your risks, like clearing the banana peels from all major and minor walkways. This will also help the future you, because the less claims you make the lower/same rate your premium will be.

Comparing Workers' Compensation Insurance Quotes

The Stanford Agency will review your needs and help you evaluate the coverage that makes the most sense. They’ll also compare policies and quotes from multiple insurance companies to make sure you have the right protection in place. So, you’ll have that going for you.