The subject of workers’ compensation insurance may not be the most popular topic to bring up at the lunch table with fellow small business owners, but regardless, it is an important discussion to have about your company at some point – sooner rather than later.
Workers’ compensation insurance regularly gets accused as something businesses are legally required to have in order to protect their employees, but the reality is that it also protects you, the business owner, as well.
Here is what workers’ compensation does and why your small business needs it:
What is Workers’ Compensation?
In brief, workers’ compensation insurance is purchased by a company to cover the medical and rehabilitation costs of work-related injuries in the event that an employee gets hurt on the job. In a normal workers’ compensation insurance policy, employees sign an agreement that prevents them from suing the company for negligence and allows the business to settle a claim out of court, in exchange for being covered by insurance in case of a work injury.
Why Your Company Needs Workers’ Compensation Insurance
For starters, one considerable reason you should have workers’ compensation insurance is because nearly every state legally requires it. However, specific guidelines regarding what kind of insurance you are obligated to have varies by state, so check your individual state’s law on workers’ compensation first.
As far as the wellbeing of your employees is concerned, workers’ compensation is essential in protecting them from unforeseen risks. If the unfortunate happens and a worker gets seriously injured on the job, having insurance will be fundamental in making sure they receive proper medical treatment, payment for lost time at work to support their family, and recovery so that they can get healthy again sooner.
But having workers’ compensation insurance is also important for business owners to protect their company.
Before workers’ compensation insurance was required, both the employees and employer suffered when an accident occurred. The injured employee would have to file a lawsuit against the company, which seriously delayed receiving their money and significantly increased the cost of seeking just compensation.
For the employers, if lawsuits for large sums were lost, and they had to pay an employee, it could cripple the entire company in one fell swoop. Workers’ compensation was created to protect both parties.
Wisdom for Small Business Owners
Our advice: Make sure your company has a solid workers’ compensation insurance policy. This is not only important for the safety and wellbeing of those who work for you and your business, but essential in protecting the company from getting exploited if an injury occurs in the workplace.
If you have any questions regarding workers’ compensation insurance for your business, consult a workers’ compensation attorney for legal advice.