Why Your Company Needs Workers’ Compensation Insurance

Congratulations, you just started your very own business. After receiving your FIEN and state account number, you’re ready to hire your first set of employees. Well, after you hire your employees, the process isn’t finished yet. In fact, it’s only the beginning.

Most new business owners are not aware that the law requires them to insure each of their employees through workers compensation. Workers compensation is a “type of insurance that provides restitution for medical care for employees that are injured while in the place of employment, in exchange for the forfeit of the employee\’s right to sue the employer under the umbrella of negligence.”

So before you begin to stress out about the possibility of adding yet another expense line item in your already packed budget, there are numerous of benefits of having workers compensation.

• As we have discussed, it is the law to have worker’s compensation. Period. So if you are hiring employees, even just one, you need to have them insured. Many states require you to have worker’s compensation or you cannot be in business. But after your employees are insured, you will be in compliance with the law – which is always a good thing right?
• Worker’s compensation not only covers the medical costs to treat injuries or illnesses, it also covers missed wages. Although some laws require employers to pay a portion of these missed wages, your insurance will cover a substantial cost of it.
• The next benefit is ongoing care. In the ever unfortunate event that an employee gets severely injured on the job, your insurance will cover those costs. In extreme cases, an employee may not be able to return to work which means your business may be required to pay for their care. By having workers compensation, your policy will cover these costs.

There are other added benefits of having workers compensation such as funeral costs and death benefits and employer’s liability coverage (if your business gets sued).

It is very important that you discuss with your insurance agent what exactly is in your workers compensation policy. Not all policies are the same and it’s important to know what exactly your business needs.