Why Do You Need Workers’ Compensation Insurance?

Jun 14th, 2012 | By Hot News Reporter | Category: Insurance Today

Worker’s compensation insurance is something every business should obtain regardless of how big or small they are. This particular coverage is designed to make sure that employees receive ample compensation for any injuries they might encounter on the job. At the same time, it provides protection for the company, saving them from possible expenses for reparation.

What Is Covered by Worker’s Compensation?

Workers compensation covers a wide array of work-related problems that the employee might encounter. These include temporary and permanent disability benefits, vocational rehabilitation, supplemental job displacement benefits and death benefits.

Dynamics of Worker’s Compensation

Worker’s Compensation is considered to be mandatory in all states. However, the glitch here is that “worker’s compensation” only applies to employees of the business. This means that individual contractors are not really covered by this requirement, allowing businesses to skip the purchase of the insurance.

Importance of Worker’s Compensation

Typically, this kind of insurance is something that should be bought differently and apart from other coverage. Note that aside from being mandatory, most States cite a specific minimum amount for employers. Not adhering to these requirements would result to severe penalties from the authorities.

However, that’s not the main reasons why this type of insurance is incredibly vital for companies. The fact is that Worker’s Compensation doesn’t just cover the big stuff but also everyday accidents that could be draining to the company when added up together. For example, an employee who encounters a car accident while pursuing a business transaction would be covered by this insurance. Aside from the medical bills and salary during their incapacitation, the insurance could also cover payment for any property damage done depending on the coverage of the policy. Note that Worker’s Compensation is not a substitute for medical insurance. Instead, it is only applicable in situations where a person is injured while in the process of performing their job.

Employees versus Independent Contractors

The most important thing about Worker’s Compensation is the definition of “workers”. Note that although mandatory, different States have different definitions for “employees”. Typically, this refers to anyone who is under the company’s direct rule. The business must be able to command all of the employee’s time and work as opposed to an independent contractor where an agreement is only met. Hence, there’s a good chance that the contractor is bound to service different clients unlike that of a regular employee. If this is the case then a business would not be required to purchase Worker’s Compensation for those individuals.

Buying Worker’s Compensation

When buying Worker’s Compensation insurance, it is vital for businesses to obtain the coverage from a trustworthy provider. Make sure to thoroughly study the policy and find out if the insurance company has had a good reputation in the business. Keep in mind that indirectly, Worker’s Compensation is meant to protect the business and should therefore be carefully picked by the management.

Worker’s Compensation Tips

Employers are advised to thoroughly explain Worker’s Compensation for their employees. This would allow them to feel secure while at the same time let them know what they could and could not claim for. These rules and regulations may vary from one state to another. For employees or anyone applying to a company, it is important to find out beforehand the kind of compensation provided by the business.

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