About 17.3% of small businesses in the U.S. have at least one employee. The workers’ compensation system requires businesses with employees to carry workers’ compensation insurance. Therefore, about 1 in every 5 businesses in the U.S. has a legal mandate to carry workers’ comp insurance. This coverage is crucial because it protects employers from lawsuits and losses resulting from workplace accidents. More importantly, it helps injured employees return to their pre-injury status, both physically and financially.
Types of Workers’ Compensation Benefits
Workers’ compensation insurance is a type of commercial insurance policy that provides different types of benefits for injured or sick employees. The benefits include:
General Liability vs. Workers’ Compensation Insurance
Unlike workers’ compensation insurance that covers your employees against workplace injuries and illnesses, general liability insurance covers third parties’ bodily injuries and property damage. So if, for instance, a group of college students touring your premises sustains bodily injuries in a stampede triggered by an explosion at your laboratory, general liability insurance will cover the resulting medical and legal costs.
Although both insurance policies provide protection against bodily injuries, they have several differences. Firstly, contrary to workers’ comp insurance which is mandatory in all states, except Texas, general liability coverage is optional. Secondly, while workers’ comp covers employee-related injuries and illness, general liability insurance only covers third-party injuries as well as property damage. Finally, workers’ comp pays for medical expenses, lost wages, disability benefits, and death benefits, while general liability covers medical expenses, legal costs, and third-party claims.
Even if you operate as a sole proprietor with no employees, you may still find this coverage useful. Workers’ compensation is necessary if:
Cost of Coverage
Some of the factors that determine the cost of workers’ compensation insurance include:
How to Buy Workers’ Compensation Insurance
You can buy workers’ comp insurance either from private insurance companies or state-funded workers’ comp programs. Some states require all employers to purchase workers’ comp through the state insurance fund. To provide you with an accurate quote, the insurance provider will ask for information such as:
Contact the experts at Knight Insurance Services to learn more about finding the right workers’ comp insurance near you for your business. We will be happy to address any questions you might have and help you with a plan best suited to your business needs.