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This is a required in almost every state. This insurance covers medical expenses, lost wages, rehabilitation services, and death benefits in case of an employee’s work-related injuries or illness.
A small business owner’s guide to workers’ comp insurance
Workers’ compensation insurance, commonly known as workers’ comp, is insurance that covers medical expenses and a portion of lost wages for employees who become injured or ill on the job. Coverage also includes employee rehabilitation and death benefits.
What is covered in a Workers' Comp Policy?
Workers’ compensation insurance, commonly known as workers’ comp, is insurance that coverage differ by where you operate but usually provide coverage for employees', owners' and officers' injuries or illness that occur due to their job duties. In general, a workers' compensation insurance policy covers:
- Lost Wages
- Medical Expenses
- Rehabilitation Expenses
- Death Benefits
Workers' compensation insurance is known by many names from workman's compensation, workers' comp, workman's comp, and others. Regardless of the name it's state regulated and generally mandatory for many businesses.
How does workers’ compensation insurance work?
Each state has its own unique set of workers’ compensation laws that employers must follow. These regulations help ensure that employers provide coverage for the cost of work-related injuries or occupational diseases, regardless of employee negligence.
An employee can only receive benefits if their injury or illness relates to their job duties or employment. Workers’ comp insurance could cover injuries caused by lifting heavy equipment, slipping on a wet or oily surface, or sustaining injury due to fires or explosions.
If an employee isn’t acting within the scope of their employment and becomes injured, such as playing football with friends on a day off, workers’ compensation insurance won’t cover them.
Workers' Compensation Insurance-Benefits For Employees
Mandatory workers' compensation insurance is invaluable to both you and your employees. It can help cover medical bills and a portion of lost wages for employees that are injured or become ill due to work-related events. It can also help cover funeral expenses if the work-related event results in a death.
Workers' Comp-Benefits For Your Business
Accidents happen, but workers' comp provides your business with a safety net that helps prepare you for the unexpected. In addition to helping cover medical bills and lost wages, the coverage may help with vocational rehabilitation services to assist getting your employee back to work. It can also help with legal costs in the event of a lawsuit.
Who is covered by workers’ compensation?
It varies based on where your business operates. For example, certain types of employees, such as seasonal workers, may not be covered by workers’ compensation in some states.
Does a sole proprietor need workers’ compensation?
No. While workers compensation laws vary from state-to-state, most states don’t require sole proprietors to carry workers’ comp.
Are contractors and volunteers covered under workers’ comp?
Depending on the state, contractors and volunteers can be entitled to workers’ compensation benefits if they’re injured or become ill on the job
