Workers' compensation insurance is frequently viewed as a liability by small business owners. But worker's compensation insurance is actually one of your company's most valuable assets -- both for you and for your employees.
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For employees, workers' compensation insurance offers peace of mind. In the event that an employee suffers an injury in the workplace, workers' compensation provides coverage for medical costs and other related expenses. No one wants to experience an on-the-job accident. But if they do, employees are assured that at least they will receive proper medical care.
For the employer, workers' compensation insurance provides protection from pricey financial litigation. It reduces the likelihood that you'll be sued by one of your employees for medical costs covered by your workers' compensation policy. It also helps prevent your employees from developing a litigious attitude due to non-reimbursed medical expenses incurred on your behalf.
Workers' compensation insurance is legally mandated in almost every state in America (New Jersey and Texas are the only states where it is voluntary.) Benefits are typically awarded on a no-fault basis. In other words, it doesn't matter who is to blame for the accident as long as the employee is not under the influence of drugs or alcohol.
The categories of employees that are covered by workers' compensation insurance vary from state to state. Some states require coverage for part-time workers and contractors while other states take a more lenient attitude toward coverage for these types of employees.
The types of expenses that are covered by workers' compensation insurance also vary from state to state. It is not uncommon for employees to be awarded compensation for lost wages in addition to the cost of medical expenses. Some policies also provide benefits for survivors in case (God forbid) one of your employees is killed in a work-related incident.
Obtaining workers' compensation coverage is as simple as contacting your insurance carrier. As with any insurance policy, it's not a bad idea to do a little research to find the best fit for you and for your employees. However, be aware that some states require employers to purchase workers' compensation insurance from a state agency. If your business is located in of these states you will have no choice but to pay the going rate.
When an injury occurs, your first step is to notify your insurance carrier. The carrier will notify the appropriate state agency who will then investigate the claim to determine its validity and to ensure that the employee receives the appropriate benefits. Incidents of workers' compensation fraud are not uncommon. It is obviously in your best interest to contact the proper authorities immediately if you suspect a fraudulent event has occurred in your company.
One last thing needs to be said about worker's compensation. Even if you are forced to provide partial compensation for an employee's claim, resist the urge to harbor a personal grudge. Remember: The employee sustained the injury on your behalf. A little understanding on your part is the right thing to do for your employee and for your business.