If you’re like many business owners, you may not fully understand your workers’ compensation coverage. While your insurance agent can help you out, it’s critical that you know your responsibilities and how your policy works—otherwise, you could face fines or employee lawsuits.
In this blog, we’ll answer the most frequently asked questions about workers’ compensation insurance, including:
Workers’ compensation policies help pay for lost wages and medical expenses if an employee suffers a work-related injury or illness. Your employees only receive benefits if your working conditions directly caused or contributed to their medical event.
After a covered event, you fill out a detailed claim form that explains how the injury occurred and the employee affected. Then, if your insurance company approves the claim, they work with the injured employee to determine payout amounts. Depending on the extent of their injuries, your employee might receive compensation for doctor bills, ongoing rehabilitation costs, prescription drug costs, and lost wages during their time away from work.
Workers’ compensation insurance makes sure that your employees don’t experience significant financial loss following an accident at work. But your policy doesn’t just protect employees—it helps your business, too. If your policy compensates an employee, that employee typically can’t sue you for medical costs or lost wages.
Workers’ compensation may minimize your chances of a lawsuit, but you can still face allegations of negligence. That’s why most policies contain employers’ liability insurance, which covers lawsuit costs if an employee or third party files suit against your company.
In most cases, the answer to this question is yes—business owners need workers’ compensation insurance. However, there are a few exceptions. Texas is the only state that doesn’t require coverage across the board. In most states, if you’re not a sole proprietor and have more than a few employees, you’re required to carry workers’ compensation coverage.
If you’re not sure that you’re exempt, check your state’s laws or consult an insurance agent.
Many states don’t require workers’ compensation insurance for independent contractors. However, the businesses you work with may not cover you under their policy. If you want to avoid financial loss if you get injured on the job, you should consider buying your own policy.
In some cases, your contracted employer will purchase occupational injury insurance if you’re not covered under their workers’ compensation policy.
Occupational injury insurance is similar to workers’ compensation insurance, but it’s designed for independent contractors who can’t receive coverage under a workers’ compensation policy. This optional insurance policy pays for medical bills, lost wages, and disability benefits, but it doesn’t cover lawsuit expenses. As a result, it’s usually cheaper than workers’ compensation insurance because it offers less protection to businesses.
Occupational injury insurance is most common in the transportation industry. Owner-operators face several hazards on the road, but they often aren’t covered by workers’ compensation insurance, so occupational injury insurance helps fill their coverage gaps.
Like most business insurance premiums, workers’ compensation premiums are usually tax deductible for businesses. However, claim payouts aren’t taxable, which means your employees cannot deduct compensation amounts from their personal taxes.
Now that you know how workers’ compensation insurance works, you might be wondering: How do I get the best coverage? You should start with an insurance agency that understands your company’s needs. At Southpoint Insurance, we partner with the most reputable workers’ compensation carriers to get you comprehensive and affordable coverage in your state.
We also understand that you don’t have much time to compare quotes as a small business owner. All you have to do is give us a few details about your company, and CompWerks will automatically calculate a quote from one of two trusted carriers within minutes. You can request to purchase your policy immediately or request a conversation with one of our experienced team members.
Get in touch today to request your quote or discuss your workers’ compensation options.