Workers Compensation Coverage. Why Should I Buy It if It Isn’t Mandatory?
Workers compensation laws vary from state to state. In some states, it is mandatory to purchase coverage if your business has at least one employee, while in others, employers are only forced to get coverage if they have a specific number of employees (i.e. 5 or more). While it may be easy to avoid the paperwork and cost of a worker’s compensation plan if you are not legally obliged, there are plenty of reasons to bite the bullet and get coverage anyway.
Protection for you and your business
The big, and most obvious, reason is to protect yourself and your business from lawsuits. Even if your operation is small and you can’t really foresee the risks of an employee injuring themselves on the job, you should play it safe. Imagine this scenario – you run a small consulting operation a hire a part-time consultant to help you with a client project. You rent a small co-shared office space and can’t imagine your employee getting into an accident. But, your consultant has a bad slip and fall in the kitchen and sues you to recoup the cost of medical treatment for their broken leg. Having insurance would have helped you avoid that lawsuit.
The above scenario outlines a case where an employer had no workers compensation. But, even if you have a basic plan that covers the mandatory items, you still may not be fully protected.
Mandatory coverage often excludes independent contractors, casual or seasonal employees and domestic workers or caregivers. Because of the loopholes and lack of comprehensive coverage in basic packages, it is vital that you speak with your broker or insurance provider to make sure that you understand the costs involved to protect your company from risks. Even if you do not have a company, but you hired a caregiver to help with your children or aging parent, you need to think about insurance and making sure your employee has the proper coverage.
With coverage, employees will be able to make claims for expenses related to medical costs, disability leave and related lost wages, rehabilitation training and even payouts to surviving family members in the event of death.
Generally speaking, when you cover an employee, or contractor, under a workers compensation policy, you will be released of liability relating to any injury or death that occurs during their term of employment. This means that an employee has to go through an insurance claim for compensation and cannot come after you, or your company, instead. Note the term generally here. Like anything involving insurance and legality, there is no black and white answer and the facts of each case will determine the final outcome. It is always prudent to discuss coverage with your provider and legal counsel when setting up, to make sure you are doing everything you need to do.
It’s the right thing to do
Aside from the legal and financial implications of not having coverage, it is the decent thing to do and will help engender a positive work environment and relationship with your employees. Employees who do not feel valued by employers can lead to a high staff turnover and low on-the-job morale. And just imagine the damage to your reputation and brand if something happens to one of your employees, you did not have the proper workers compensation coverage, and you get into a lengthy and painful lawsuit with them for damages. You will have soured your relationship with that employee, plus wasted months and a ton of legal fees in the process. And then there’s the reputational damage to you and your company – you and your company don’t want to be known as the employer to avoid.
No matter the size or nature of your business, you should make sure you and your employees are properly covered. There are many packages, and workers compensation add-ons, that are available, ensuring that you can find the proper mix of coverage and cost that works for your operations.
@thefrankmedina
