What Is Workers’ Compensation Insurance?

This type of insurance pays the costs of an employee’s workplace injuries, including medical expenses, rehabilitation in recovery, and lost wages. You may also be covered for legal expenses in the event your employee files a lawsuit against your business.

Depending on your state and insurer, your employees might also be covered for vocational training to help them find work if their injuries prevent them from returning to their jobs, and death benefits paid to their families.

Workers’ Compensation and the Law

Many states require employers to purchase an insurance policy with a minimum level of cover. For example, in California, employers must hold a policy that covers injured employees for medical treatment, temporary and permanent disability payments, life pensions for severely disabled workers, and retraining in the event an employee cannot return to their original job. California law also requires policies to cover death benefits payable to families in the event employees die on the job.

State laws may also set out a range of other requirements. In California, employers must post a notice in the workplace setting out information about their insurance coverage, including details of the insurer’s claims administrator and medical provider network. Employers must also provide an injured employee with a claim form within one business day of the injury being reported.

Sole Proprietors and Workers’ Compensation

Sole proprietors are typically exempt from state laws requiring employers to purchase workers’ compensation policies. Many sole proprietors instead opt to purchase an array of other insurances, such as health, life, and disability income policies, to cover them in the event of a workplace accident.

However, while sole proprietors may be legally exempt from doing so, there are some circumstances in which purchasing a workers’ compensation policy might be a good idea. Many companies require contractors to carry coverage, particularly in riskier industries such as construction, as a precaution against liability claims. In addition, states sometimes deem subcontractors to be employees for the purposes of workers’ compensation law, meaning even a business with no employees may be required to take out a policy.

As a business owner, you do your best to keep your employees safe, but in the unfortunate event that an accident occurs in your workplace, it’s important to ensure your employees are adequately covered. For a detailed discussion of your business’s insurance needs, including advice on your state’s workers’ compensation requirements, call ISU Armac Insurance Services. Our staff are experts in workers’ compensation and can help you reduce your premiums.