Do you consider workers' compensation insurance just one more unnecessary cost of doing business? If so, think again.
by James West in Business Insurance on Tuesday, March 7, 2017
Workers’ compensation insurance, like auto insurance, is typically mandatory for employers in most states. In a few states, smaller employers (generally those with 1- 3 employees) may opt out of the mandatory coverage. In states where you may be able to opt out, many employers still elect to opt into worker’s compensation coverage to take advantage of some critical protections that are unavailable to nonparticipants. These protections include:
Workers’ compensation statutes provide exclusive remedy for injured employees. This means that under most circumstances an employer cannot be sued for causing the injury of the insured.
The no-fault provision of the workers’ compensation statutes provide protection for your employees in the event they are injured on the job regardless of how the injury occurred. In most circumstances, as long as the employee is injured within the course and scope of his/her employment, coverage is provided even if the employee was partially responsible for his/her own injury.
Peace of Mind
As a business owner, you can elect to also be included for workers’ compensation benefits right along with your employees. This means that you can obtain access to statutory benefits including; (1) payment of medical expenses; (2) payment of lost wages/income; and (3) payment of disability benefits—this can be critical if you or your employee becomes injured and cannot return to work.
Voluntarily participating in your state’s program is usually the wisest course of action to protect your employees and your practice.
In states where participation in workers’ compensation is mandatory or if your business is too large for you to opt out of the coverage—there can be severe consequences for not purchasing workers’ compensation insurance. These penalties include:
Fines: Some states may fine your business for each day that you do not maintain coverage. These fines can amount to thousands of dollars, and in some cases the fines alone can put you out of business.
Penalties: Some states may actively prohibit you from operating your business or obtain a court order to shut your business down until you provide evidence of coverage.
Personal liability: You and your business may be held personally liable for paying for your employees medical expenses and lost wages.
Loss of exclusive remedy: If you do not maintain coverage and your employee becomes injured, he/she may obtain the right to sue you in court for damages.
Even if you have a small practice with a close-knit group of just two or three employees, an accident or incident could lead one of your workers to file a suit against the practice or against you personally. It is also possible that, if a suit is filed, you as the employer could find yourself liable for the settlement and could be expected to pay, even if the practice goes out of business.
Having workers’ compensation not only protects your employees, it also protects you—the practice owner—from devastating lawsuits, allowing you to focus on keeping your practice going and growing.
To learn about the workers' compensation rules in your state, information is available through the National Federation of Independent Business.
NCMIC Insurance Services will be glad to help you secure this valuable coverage. To learn more, contact an agent today at 1-800-769-2000, ext. 8180.