As a small business owner, you consider your work to be pretty risk-free. Even so, we know that sometimes life throws us curveballs, and mistakes will still happen.
Imagine you slip on some ice as you go to visit a client in the middle of winter and injure your back. Maybe a heavy piece of equipment breaks your hand.
There are a lot of situations when workers’ compensation might be needed (or desired).
Work-related injuries are usually excluded from health insurance policies. Having workers’ compensation coverage helps prevent a major financial burden when someone is injured at work.
What Does A Workers' Compensation Policy Cover?
Several types of work-related injuries are covered by workers’ compensation, according to Workplace Fairness. The list includes:
- Occupational injuries
- Work-related aggravation or acceleration of pre-existing conditions
- A workplace injury can be caused by a broken slip or fall during a break, lunch hour, or work-sponsored activity as well as a facility malfunction
- Injuries caused by physical and mental strain at work
To understand what workers’ compensation does not cover, it helps to look at what a policy does cover. Among these types of injuries are those caused by self-inflicted injury, accidents during intoxication, accidents while an employee wasn’t on the job, and injuries caused when a worker committed a serious crime or violated a company policy.
Who Is Required To Carry Workers' Comp Insurance?
States mandate and regulate workers’ compensation coverage. Workers’ comp laws by state are outlined by the National Federation of Independent Business.
Remember, though, that most states require employers with full- or part-time employees to have workers’ comp insurance. While some states require employers to carry workers’ comp coverage if they have at least one employee, others have a minimum of three. You don’t have to maintain your workers’ comp insurance if you lay off all your employees, however, you will save money if you hire them back within 30 days.
Are You Required To Have Workers' Comp If You're Self-Employed?
Sole proprietors and independent contractors are not included in the list above. Then you may be wondering, “Do I need workers’ comp insurance if I don’t have any employees?”
It’s not required by law to carry workers’ compensation insurance for businesses that don’t have employees.
Despite this, you should still consider investing in workers’ compensation insurance, especially if any of the following apply to you:
You work in an industry with a high injury rate
In some industries, such as construction, injuries are common, so you should seriously consider getting workers’ compensation for yourself.
You wouldn’t want to lose out on your income during recovery not just because of hefty medical bills, but also because of medical bills.
Insurance coverage is requested or required by your client
Clients usually include a clause in their contracts that requires the contractors they work with to have insurance.
General liability policies are generally sufficient. However, especially in high-risk industries, you might be asked to carry workers’ compensation insurance.
So, how do they differ? Workers’ compensation protects your body, while general liability protects your business.
If during repairing a roof, you caused property damage to a customer, that would be covered under your general liability policy. On the other hand, if you slipped off the roof and broke your leg, workers’ compensation would cover it.
You have subcontractors
Another rule varies from state to state. Depending on your state, subcontractors could be considered employees, and a workers’ compensation policy might be required.
Additionally, you must ensure that employees are not misclassified as independent contractors. As a small business owner, you may face fines and penalties as a result.
Contractors are generally considered self-employed. That means you cannot determine when, how, or what gets done.
When You Are Self-Employed, How Do You Get Workers' Comp?
Workers’ compensation insurance sounds like a good idea to you? You’re probably wondering: how do you get coverage?
Because insurance companies are not particularly profit-driven, it isn’t always as simple as you’d think.
Ask your broker about coverage if you’re considering buying a workers’ compensation policy. You will be able to explore your options and make the right business decision with their assistance. No insurance agent? The Independent Insurance Agents and Brokers of America, Inc. offers a directory you can search or ask other business owners for recommendations.
Additionally, you can check if your state has a workers’ compensation fund. Government-funded insurance provides coverage for businesses that cannot find workers’ compensation policies on the private market.
Prevention Is The Key To Avoiding Accidents
Workplace safety programs can help you rein in the direct and indirect costs of workers’ comp claims. You can save money by preventing accidents before they happen, improving employee morale, and lowering costs of insurance by preventing injuries before they happen. Be proactive if you don’t yet have a plan.
Businesses and self-employed contractors might want to consider getting a policy that protects their business if they get hurt at work instead of skipping workers’ compensation protection. Get in touch with an insurer today, PEOPayGo is a great option.
As a Professional Employee Organization (PEO), P.E.O.PayGo can help you get workers comp, bundle payroll, and HR, and perform all the headache functions of a small business, all while saving your time and money. Let our Instaquote do all the work, we don’t need much information and it takes 2 minutes. Our software does all the work for you.
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