Workers’ compensation insurance can be a complex coverage to understand. Workers’ compensation insurance is a federal requirement that every state must provide and each state determines its own methodology. It is important that business owners take the time to research and review their policies and establish workplace best practices.
WHAT is Workers’ Compensation Insurance?
The purpose of workers’ compensation insurance is to protect both the business owner and employees if an injury, accident, or occupational disease occurs on the job. Workers’ compensation insurance provides employees with medical payments and proper compensation while protecting the business owner from a negligence lawsuit. It is important to note that employers can still be held liable if gross negligence is proven.
Premiums are typically determined through a formula made up of a number of factors including payroll, benefits, and other variables. This formula, in conjunction with a risk factor classification, will help insurers arrive at the total cost of insurance. If an injury or accident occurs while on the job, workers’ compensation will help cover the medical costs, disability pay, rehabilitation expenses, and death benefits for survivors.
WHO needs Workers’ Compensation Insurance?
Workers’ compensation laws vary by state, but no business that has W-2 employees should consider it optional. In D.C., Maryland, and Virginia, where the majority of our customers reside, it is, in fact, a requirement for virtually all businesses. If a business is required to carry workers’ compensation and they fail to do so, they can be hit with costly fines, lawsuits, and even possible imprisonment for responsible executives.
While some industries have a higher inherent risk for injuries or accidents, injuries and accidents can happen anywhere and at any time. Common claims can include overexertion, slips or trips, being struck by an object, or repetitive motion injury (this can include carpal tunnel and tendonitis).
WHY your business should have an established safety program
Workers’ compensation premiums can be directly affected by the number of workers’ compensation claims submitted. By investing some time and money into developing or enhancing a company safety program, you can prevent accidents from happening and also positively affect your business’ experience modification rating. Outside of costs and ratings — and most importantly — a workplace safety program provides employees with a safer and more stable work environment.
Wondering where to start? A great first step for developing a new program or enhancing your current one is to conduct an internal workplace safety audit. This audit will allow you to identify risks, hazards, and areas for improvement within the workplace. Once you have a general idea of where your business currently stands, you can start assembling rules and procedures to address the safety concerns identified in the audit. It is also important to have a clearly identified and accessible accident procedure plan.
Other safety program components to consider include compiling a safety handbook for employees, holding yearly safety trainings, and even implementing a safety incentive program for employees.