How does workers’ compensation insurance work?
Workers’ compensation insurance, commonly known as workers’ comp, is insurance that covers medical expenses and a portion of lost wages for employees who become injured or ill on the job. Coverage also includes employee rehabilitation and death benefits.
Each state has its own unique set of workers’ compensation laws that employers must follow. These regulations help ensure that employers provide coverage for the cost of work-related injuries or occupational diseases, regardless of employee negligence.
An employee can only receive benefits if their injury or illness relates to their job duties or employment. Workers’ comp insurance could cover injuries caused by lifting heavy equipment, slipping on a wet or oily surface, or sustaining injury due to fires or explosions.
If an employee isn’t acting within the scope of their employment and becomes injured, such as playing football with friends on a day off, workers’ compensation insurance won’t cover them.
Who needs workers’ compensation insurance?
If your business is in California and you have employees, you are required by law to have workers compensation insurance.
Choosing to forgo workers’ comp coverage puts your business at high financial risk. Not only can you face a lawsuit for workplace injuries, but you’ll likely be fined for breaking the law.
Keep in mind, workers’ comp insurance protects not only your employees, but your small business too. For example, if your insurance is compliant with state law, an employee who receives benefits can’t sue you for their injuries or lost wages.
They can, however, sue you for things that aren’t covered under the workers’ comp portion of your policy.
Employer’s liability insurance is also included in your policy to pay for court costs and legal fees if you’re involved in such a lawsuit.
How much does workers’ compensation insurance cost?
Different industries and jobs have different classifications based on the risk of injury associated with that specific type of work. There are literally hundreds of different class codes and each carrier will charge a rate based on their own rate of claims for that industry.
If you would like to learn how much workers' compensation would cost your business you need to speak with a licensed insurance broker who can guide you through the process of classifying your employees and find you the best rates and coverage for your business.
You can contact us through the form below and we will help you find the coverage you need to protect your business.