With the exception of Texas, all the states in the U.S. have a workers’ comp mandate, per the National Federation of Independent Businesses (NFIB). This law applies to all employers, including those with only one employee, except for states such as Virginia, where employers with only one employee do not necessarily have to carry this coverage. Workers’ comp not only protects a business’s finances but also relieves employees of the burden of paying for medical costs out of pocket. This means it benefits both employers and employees. Here’s some more information on this topic.
Covers Legal Costs
In some cases, workers’ compensation laws allow an employee to sue his/her employer for work-related injury, illness, or death. In fact, per the Bureau of Justice Statistics (BJS), about 5% of cases involving personal injuries go to trial. Common reasons for workers’ compensation feuds include, among others:
- Fraudulent claims
- Lack of witnesses
- Employer denying responsibility
- Nature and cause of injury
In such a scenario, workers’ comp insurance would cover the employer’s legal expenses.
Pays for Medical Expenses
Workers’ comp covers the costs associated with a workplace illness, injury, or death. This includes the cost of therapeutic care and long-term disability. In the event of a workplace fatality, the policy typically covers funeral expenses and death benefits. This not only helps a business protect its finances but also its reputation.
Increases Employee Morale
Your employees will work hard and stay motivated if they know they will be covered in case of an injury or work-related illness. This, in turn, boosts the company’s overall productivity, which eventually maximizes profits.
Protects You from Lawsuits
Workers’ compensation insurance protects you from potentially costly workplace injuries and lawsuits. For instance, if you have no workers’ compensation coverage, an employee may sue you for a work-related injury or illness, citing negligence or an unsafe working environment.
Provides No-Fault Coverage
Although this depends on the insurance provider, your workers’ compensation plan can provide no-fault coverage to your employees. In other words, your employee will receive compensation even if he/she is partially responsible for a workplace injury, depending on the extent of contributory negligence by the injured employee. This is a good deal because most insurance carriers do not pay for claims resulting from an employee’s intentional injuries or negligence.
It Is a Legal Requirement
The federal government obliges every employer to purchase workers’ comp for their workers. This means that breaking this law can lead to serious legal implications which include, among others:
- Paying fines
- Losing your business license and other penalties
- Being held responsible for personal liability
- Losing exclusive remedy
To stay on the safe side of the federal labor laws, ensure you carry enough workers’ compensation insurance for your employees.
These are some of the benefits of carrying workers’ compensation insurance coverage. For all your commercial insurance needs, contact the experts at Modab Insurance Services. Our team will help you get the right insurance coverage that suits your needs.