How Workers’ Comp Insurance Saves You Money!
Most small businesses must provide workers’ compensation insurance to cover employee’s injuries or illnesses that happen in the course of employment. You might balk at the expense, however, it is much less expensive, time-consuming, and stressful to participate in your state’s statutory no-fault workers’ comp scheme than to deal with workplace injuries on your own – both for you and your employees. This article explains why.
What is Workers Compensation Insurance?
Worker’s compensation insurance commonly referred to as “workers’ comp,” covers medical expenses, the cost of rehabilitation, permanent or temporary disability, whether partial or total and lost wages. If an employee is killed in a work-related accident, workers’ comp may provide death benefits to the employee’s family.
Workers’ comp helps not only employees but employers. Workers’ comp protects employers from liability for workplace injuries or illnesses by providing an alternative administrative path for workers’ comp claims. This keeps any dispute over workers’ comp benefits out of the court system, and workers’ comp benefits are ultimately paid by the insurance company, not by the employer.
Ultimately, workers’ comp is beneficial to the employee because:
- Medical benefits and lost wages are paid far more quickly than if the employee had to sue the employer;
- The employee can return to his or her job when healed, or to light duties if able to work but unable to perform former duties;
- If permanently disabled and unable to work, the employee received a lost-wages benefit in place of wages.
Workers’ comp helps the employer in that:
- Apart from some notice and reporting requirements, which vary state-to-state, the insurance carrier deals with claims, not the employer;
- The insurance company pays for medical expenses and lost wages when serious, expensive injuries or illnesses, not the employer;
- The employer retains the employee if the employee is rehabilitated and able to return to work.
What is Compensable under Workers’ Comp Insurance?
An illness or injury that happens to an employee (not an independent contractor) during the course of employment, resulting in medical expenses, lost wages, and inability to do the job temporarily or permanently is compensable under workers’ comp.
What Type of Injuries and Illnesses are Covered Under Workers’ Comp?
- Injuries from workplace accidents, like a broken arm from a fall or a slip
- Illness from exposure to toxic chemicals or materials at the workplace
- Repetitive stress injuries like carpal tunnel syndrome, caused by the type of work
- An emotional injury like stress, anxiety, or emotional distress
- Death due to a workplace accident, injury, or illness
What Happens if I Don’t Have Workers’ Comp Insurance?
In most states, there are exemptions to the workers’ comp requirement. But what happens when you choose not to be covered by a workers’ compensation policy?
If you are not willing to pay the employee’s expenses and lost wages out of pocket at his or her request, the employee will be forced to sue you and your business. Even if you retain an attorney, this will be a distraction from your business, be stressful, and ultimately be more expensive than if you just maintained workers’ comp insurance.
Consider both the hard and soft costs of litigation over workplace injuries:
- Attorneys’ fees and court filing fees;
- Time and attention you should be giving to your business;
- The harm litigation does to the employer-employee relationship;
- Whatever a jury would award the employee in medical expenses, past, and future;
- Whatever a jury would award the employee in pain and suffering;
- Whatever a jury would award the employee in lost wages, past, and future.
Ultimately, maintaining a workers’ comp policy protects both you and your employees and is just good for business.
About the Author:
Veronica Baxter is a blogger and legal assistant living and working in the great city of Philadelphia. She frequently works with Larry Pitt, Esq, a busy Philadelphia workers’ compensation lawyer.
