If you’re new to the world of business, or have recently begun taking on employees, you may have some questions surrounding workers compensation insurance, here are a few of them along with their answers:
- Does the law state that all employers must provide workers comp insurance?
Every state has its’ own set of rules and regulations surrounding this type of insurance, and in most cases, states have made it mandatory as soon as you officially hire your first employee. Currently, Texas is the only state in which it’s optional to purchase workers comp insurance. It’s also worth noting that the construction industry often has its own rules about insurance that vary from other industries. For more detailed advice on your specific industry, reach out to a trusted payroll provider who can give you all the answers you need.
- What does this insurance pay for?
Workers’ compensation insurance helps pay for medical expenses and partial loss of wages that have resulted from a work-related injury or illness. In the tragic event of a fatality, it also pays death benefits.
- If workers are self-employed or independent contractors, do they need insurance?
Generally, this type of insurance is not mandatory for these workers, but there may be circumstances in which independent contractors or the self-employed may be advised to purchase a policy.
- Why is worker classification so important?
How much workers compensation insurance costs depends upon the type of work that your employees are doing, so classifying them correctly is extremely important if you’re to avoid incurring costly lawsuits and/or penalties. Each employee must be assigned a class code that is an accurate reflection of the type of work they’re performing, and the level of risk involved.
- What happens if a company hires more employees?
When a business takes on more employees, the insurance premium rates will be adjusted accordingly, and it’s easy to add extra insurance later. Speak to your existing insurance provider if your own business’s policy circumstances change for any reason.
- What is the difference between workers compensation and general liability insurance?
Both types of insurance can pay for medical expenses in relation to an accident at a place of work, but general liability does not cover injuries to employees. So, it may be that you choose to purchase both types of insurance, but as workers comp is legally required by most states, you would need to at least purchase this one.
Workers compensation insurance is a simple premise, but it can get complicated depending upon the size of your company and the type of industry that you’re involved in. For the most up to date information about insurance for your business, speak to a professional payroll advisor today.