Guide to Workers Compensation Insurance for SMBs (2022)

In 2014, james jarrell was training to be a truck driver in fort wayne, indiana, when he suffered a serious injury on the job, but not the kind of injury you’d expect. One morning, after his coach abruptly woke him up to perform a pre-trip inspection of the truck, Jarrell stepped into a pot of hot water and severely burned his feet, for which he was taken to the hospital by ambulance. .

This might not sound like a work-related injury at first (Jarrell wasn’t driving, logging in or getting dressed for work yet), but the court found Jarrell qualified for workers’ compensation. the coach had told him to sleep in the truck and had woken him up for the job-related inspection.

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jarrell’s case was unique. But workers’ compensation claims are not, which is why all business owners with employees must have workers’ compensation insurance. And with average claims ranging from $2,000 to $20,000, even small business owners need to be careful.

what is workers’ compensation insurance?

Workers’ compensation insurance is insurance coverage for work-related illnesses and injuries in the workplace that covers a portion of lost wages, medical bills, disability, and death benefits in the event of a a workplace accident, and protects employers from any related lawsuits.

How does workers’ compensation insurance work?

Workers’ compensation is a two-way street: both the employee and the employer agree to certain conditions in the event of an incident. The employer agrees to pay for medical expenses, lost wages, and other possible benefits resulting from work-related injuries and illnesses. to obtain these benefits, however, the worker accepts limitations for which he can sue the employer.

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To obtain workers’ compensation benefits, the injured or ill employee must file a workers’ compensation claim about the accident or illness with their employer. The employer must then provide the employee with a workers’ compensation claim form (forms vary by state) within one business day of the incident. both parties complete their respective sections of the claim, which is then sent to the insurance company for review.

Depending on the state in which the claim is filed, the insurance company may or may not be required to cover expenses while determining the validity of the claim. If your business doesn’t have workers’ compensation insurance, you must cover all costs for your employees out of pocket.

what does workers’ compensation cover?

  • medical care
  • disability and lost wages
  • survivor benefits
  • rehabilitation and physiotherapy
  • As with all forms of business insurance, the exact coverage provided by workers’ compensation varies from company to company. it also depends on the severity of the workplace injury or illness. In general, a workers’ compensation policy includes the following:

    medical care

    workers’ compensation covers the immediate costs of medical care and any subsequent surgeries, doctor’s visits, and medical equipment if an employee is injured in the workplace.

    disability and lost wages

    If an employee has to miss work due to a job injury or work-related illness, workers’ compensation insurance covers lost wages or disability payments.

    survivor benefits

    If an employee dies in an accident at work or from a work-related injury, workers’ compensation often pays their family part of the expected lost wages and funeral expenses.

    rehabilitation and physiotherapy

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    If a work-related injury results in the need for physical therapy or rehabilitation, workers’ compensation insurance covers you.

    What does workers’ compensation insurance not cover?

    on the other hand, workers’ compensation generally does not cover:

    • injuries sustained under the influence of alcohol or other drugs
    • illness as a result of food brought from home or otherwise prepared by the employee
    • injuries sustained while traveling to or from work
    • injuries or illnesses sustained during workplace recreation or wellness programs
    • Do I need workers’ compensation insurance?

      To protect your business, it’s a good idea to have workers’ compensation insurance, and depending on the state you’re in, you may need it if you have one or more employees. however, not all business owners are required to carry workers’ compensation insurance. sole proprietors, for example, don’t need it, because they don’t have employees, and neither does a business that only hires contractors.

      Keep in mind that most states require some degree of workers’ compensation insurance and specific requirements are in place at the time a business hires its first employee. other states do not require it until a business has a minimum of two to five employees. Texas is the only US state. uu. which does not require most private employers to have workers’ compensation.

      Certain jobs are exempt from workers’ compensation insurance, depending on the state. these include:

      • seasonal workers
        • farmworkers
          • insurance agents
            • real estate agents
              • business owners
                • undocumented workers
                  • domestic workers
                    • employees on loan
                    • how much does workers compensation cost?

                      Like all commercial insurance, workers’ compensation insurance costs vary from company to company and from state to state. The rate also depends on your company’s line of work. For example, companies with a higher risk of accidents, such as a delivery company, are likely to face higher premiums than those with a lower risk of accidents, such as a content marketing agency. other factors include size of payroll, additional workplace activities, and claims history.

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