Whether you’re a seasoned business owner with years of experience under your belt or a new business owner ready to take on your first company, you’ve likely heard of workers’ compensation. A workers’ compensation policy protects your workers from injury or illness that occurs as a direct result of the job. This form of insurance is an essential part of helping your business run smoothly.
If you’re not familiar with the ins and outs of workers’ compensation, you may be wondering why you should buy work comp. Let’s unpack three important reasons why you need workers’ compensation insurance for your business.
1. Most States Require Workers’ Compensation
If you’re wondering why worker’s compensation is important for your business, one of the most common answers you’ll hear is because most states require it.
If you’re not sure what your state’s requirements are concerning work comp, it’s best to consult a professional. Our team of experts can help you figure out whether your state requires workers’ compensation and how to find the best rate for you.
What Happens if You Don’t Follow Your State’s Requirements?
Just like every state has different laws and regulations concerning workers’ compensation, they also have different penalties and consequences for businesses that don’t comply. These can range from mild to severe penalties.
In severe cases, some states may require your business to pay a hefty fine and even serve jail time. Here’s what you need to know.
- California: If you fail to comply with the workers’ compensation laws in California, you can be charged with a criminal offense, up to a year in jail, and a fine of at least $10,000. If you’re illegally uninsured, these fines could increase up to $100,000.
- Illinois: If your business is illegally uninsured in Illinois, you’ll face a minimum fine of $10,000 with $500 for each day of noncompliance.
- New York: Depending on the specifics of your case, you could be charged with a misdemeanor or a felony for failing to have workers’ compensation coverage in New York. Fines range from $1,000 to $50,000 with an extra two thousand for every ten days you go without coverage.
- Pennsylvania: Pennsylvania requires the longest jail time for businesses that intentionally lack workers’ compensation coverage. You could face up to seven years in jail, a third-degree felony, and $15,000 in fees.
When do you need workers’ compensation for your business? The answer is as soon as you have one employee. If you are employing another person, you must have workers’ compensation if your state requires it.
It’s absolutely critical to know what your state requires concerning workers’ compensation coverage. Be sure to consult an expert to protect your business from severe fines and charges.
2. Workers’ Compensation Protects Your Business
Workers’ compensation insurance isn’t just a requirement you have to comply with. This type of coverage offers a range of benefits for keeping your business and employees safe on the job.
Workers’ compensation is essential for protecting your business if one of your employees is injured or ill as a direct result of their job.
Here’s a real-world example. Let’s say you own a company that deals with chemicals on a daily basis. This could be a landscaping company that lays down fertilizers and pesticides, a business in the laboratory industry that deals with chemicals, or a manufacturing job.
If you have an employee who contracts a disease due to exposure to chemicals on the job, your business will be responsible for all medical expenses, recovery expenses, lost wages, and compensation for emotional distress.
These costs can add up to hundreds of thousands–even millions of dollars in extreme cases. f your business doesn’t have workers’ compensation insurance, you may be faced with paying these expenses out-of-pocket. For businesses that don’t have the funds, you may face lawsuits or even bankruptcy.
The average work comp claim in the United States from 2018 to 2019 was $42,000. Since then, workers’ compensation claims have risen and are expected to continue rising for the foreseeable future.
Workers’ compensation insurance offers your business protection, financial security, and gives you some peace of mind.
3. Workers’ Compensation Helps Your Workers, Too
The final reason why you should buy work comp is that it helps your employees. If your employee sustains an injury on the job, workers’ compensation covers all their medical expenses and provides them with quality treatment options.
Overall, workers’ compensation helps cover the following expenses:
- Emergency transportation such as an ambulance ride
- Medical treatment and expenses
- Hospitalization
- Physical therapy and recovery
- Medication and prescriptions
- Replacement for lost wages
- Emotional damages
Workers’ compensation can also make a job offer more appealing to potential employees. When you offer compensation, your employees can enjoy peace of mind concerning work-related injuries and illnesses. Work comp acts as a safety net for your business and your employees.
How to Find a Policy
Workers’ compensation is more than just a requirement that most states set in place. It can help save your business thousands of dollars and provide protection for you and your workers. Here at Direct Work Comp, we make work comp easy.
Our team of experts can help you manage claims, support your HR department, provide resources to help your business, and navigate the complicated process of workers’ compensation.
If your business already has an insurance agent, don’t worry we will work with them! You can still work with us to save up to 30% on a workers’ compensation insurance policy. With a team solely devoted to workers’ compensation, we can help you navigate the ins and outs of coverage. Get an instant quote today!
Sources:
State Workers’ Compensation Officials | US Department of Labor
