How to Get Workers’ Comp: A Guide to Buying Your Policy

Workers Comp

Hiring your first employee is a major milestone. It means your business is growing — and you’ve got enough work to share the load. But before celebrating, you should follow a few official steps first, and learn how to get workers comp insurance.

Workers’ Comp Insurance — What it is and Why You May Need It

Workers’ compensation is insurance that can help if your employees experience an accident or injury on the job. It’s designed to help pay for medical bills, ongoing care, and much more.

It’s also designed to protect you, as an employer. It can help reduce your risk of a lawsuit if someone gets hurt while working. After all, if an employee doesn’t get financial help with their medical bills, they may come after you for compensation.

Here’s an example of workers’ compensation in action. Let’s say you own a small manufacturing company that just got off the ground. Your IT professional is installing a brand-new monitor in the packaging area when… boom! The large monitor crashes down on him, hitting his head and shoulders. After several doctor’s appointments, you learn that your IT worker will need major surgery and be out of work for at least 3 months.

Fortunately, you purchased workers’ compensation insurance before the employee began working for you. This means that your employee’s surgery and follow-up care are covered by your policy. It also means that he will receive coverage for lost wages until he recovers and returns to work. It’s a win for everyone involved.

Your employee can receive adequate care and be ready to return to work, and you, as the employer, are less likely to face a costly lawsuit.

Here’s another example. Let’s say you own a hair salon, and you’ve just finished mopping the floor at the end of a long day. Your junior stylist walks in and falls on the wet floor, causing a major hip fracture.

Besides needing a visit to the emergency room, she also has to take a few months off and undergo follow-up care. If you have workers’ compensation insurance, your policy can help pay for lost wages until she recovers and returns to work. It also could cover her doctor’s appointments and even physical therapy, if needed.

Think these types of injuries or accidents can’t happen at your workplace? Think again.

According to the National Safety Council, in 2019, the total cost of workers’ injuries was $171.0 billion, with the average cost of just one medically consulted injury being $42,000. Can you imagine paying that amount out of your own pocket during a lawsuit? It’s likely enough to put most small businesses out of business.

That’s why workers’ compensation is required in most states. So if you’re researching how to hire your first employee or if you already have any employees, it’s most likely time to get a policy lined up.

Workers’ Comp Insurance Cost: Avoid These Mistakes When Buying Your Policy

At Simply Business, we don’t want to see you fall prey to common workers’ comp mistakes. Take a look at our tips for getting the right insurance in place, at the right price.

Mistake #1: You assume that every state has the same workers’ comp requirements.

The truth: Workers’ comp regulations can vary from state to state. So it’s important to check with your specific county and state’s guidelines to find out:

  • The amount of benefits employees must receive.
  • Which employees are entitled to benefits (e.g., part-time workers, contractors, and freelancers).
  • Which accidents, illnesses, and injuries are covered and which aren’t.
  • The process for evaluating a workers’ compensation claim, as well as disputing one.

And if you live in Texas or South Dakota, things are very different. Texas and South Dakota are the only states that don’t require employers to purchase workers comp coverage for their employees. That said, it’s wise for small business owners in those two states to get insured. Without coverage, you could face a costly lawsuit from an injured employee. Insurance protection can truly pay off.

The bottom line: It’s important to find out how coverage works where your business is located. At Simply Business, our representatives can help. Just give one of us a call at 855-930-2844 to help you in finding out your state’s requirements.

Mistake #2: You assume a general liability policy covers your employees too.

The truth: If one of your employees gets injured on the job, your general liability insurance likely won’t provide coverage. Instead, a general liability policy pays for the costs of injuries or accidents that happen to third parties, such as customers and vendors.

That’s why it’s so important to purchase a separate workers’ comp policy as soon as you hire your first employee. Remember, a general liability policy typically offers completely different benefits than workers comp.

Mistake #3: You wait too long to buy a workers’ comp policy.

The truth: As soon as you hire your first employee, it’s important to have coverage in place. You never know when an expensive claim might occur. For example, what would happen if an employee got injured and you were still waiting to buy a policy?

Even if you secure coverage after the injury, your employee likely can’t receive benefits. In the end, you’ll be liable for the costs and you could face a lawsuit.

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What does workers’ compensation cover?

Workers’ compensation is designed to help employees recover from their injuries or illnesses and get back to work as soon as possible — whether it’s in their current job or a modified job that they are able to currently perform.

Workers’ comp coverage also aims to protect employers like you. By financially providing for employees, it reduces the risk of costly lawsuits.

You can expect workers’ compensation insurance to pay for the following, up to your policy’s limits:

  • Lost wages. This payment can be made in either one lump sum or over weekly installments and is called temporary disability. This payment usually ends when an employee returns to work.
  • Medical exams, tests, and surgeries. If an illness or injury requires medical care, workers’ compensation covers the bills — even after an employee returns to work.
  • Ambulance rides and emergency room visits. If an accident or illness requires immediate care, workers compensation insurance can help cover those costs.
  • Physical therapy and ongoing care. Some injuries require ongoing, long-term care. Workers’ compensation benefits can help cover the costs of therapy so that, hopefully, an employee can fully heal.
  • Funerals, burials, and survivor benefits. In the tragic event that an employee dies while on the job, workers’ compensation can help pay for a funeral and other end-of-life costs.

According to the National Safety Council, in 2020, the top three job-related injuries or illnesses were:

  1. Exposure to harmful substances or environments. This can include toxins, radiation, electricity, as well as contagious diseases.
  2. Overexertion and bodily reaction. This can include an accident related to lifting, pushing, or carrying an object, as well as repetitive motion injuries, like tendonitis or nerve pain.
  3. Slips, trips, and falls. Imagine falling off a roof or ladder, or even slipping and falling on a wet floor.

Other major causes of workplace injuries involve motor vehicle accidents, machinery and equipment, and fires and explosions.

The good news is that a solid workers’ compensation policy should help cover injuries and illnesses related to any of these incidents — and much more.

No matter what your employees have faced on the job, know that your policy likely will protect them until they’re able to work again, and in many cases, long after. If they can no longer work in the same capacity, your policy may be able to assist them with job training for a new career.

How does workers’ compensation work?

Insurance can get confusing, but we’ll help make it clearer. Workers’ compensation functions like many other types of business insurance. You pay for a policy based on a number of factors.

Then your employees receive certain benefits if they get sick, injured, or even pass away on the job. Keep in mind, if there’s a death on the job, the benefits usually go to the employee’s family or beneficiaries.

Now if a workplace injury does happen, it’s important to take quick action. First, you should:

Make sure your employee gets appropriate care right away. If it’s an emergency, or the injury is severe, call 911.

  • File a report of the accident, injury, or illness. Typically this form is called the First Report of Injury or Illness, but some employers have their own forms. It’s important to document all information about the injury or accident, even if the employee denies medical care.
  • Contact your workers’ compensation insurance provider. It’s very important to be cooperative and work hand-in-hand with your insurance provider. Make sure to provide them — and only them — with documentation.
  • Report the incident to the Occupational Safety and Health Administration (if it is severe enough). If an employee experiences a serious injury or illness, it’s important to contact safety professionals to help prevent additional issues from occurring.
  • Consider disputing an unfair claim. If you believe your employee was injured at home or somewhere else besides work, you can dispute a claim. Your employee would have to prove that they’re entitled to workers compensation benefits.

It’s possible for you or your insurance provider to deny a claim if the worker was injured outside of the workplace or was participating in a workplace misconduct, for example. But, once you determine that your employee should receive workers’ compensation benefits, and you submit the claim to your insurance company, that’s typically all you need to do.

If the claim is approved, your employee should receive fair compensation for medical bills, ongoing care, and time off work. In general, temporary disability payouts end as soon as your employee returns to work; however, your insurance company will continue to pay medical bills even after the employee returns to work.

In short, your insurance company is required to pay temporary disability until a doctor says it’s OK for an employee to return to work, and they must cover all medical bills that doctors determine were caused by the incident.

But what if an employee wants to return to work but can’t work in the same capacity? It happens all the time. In this case, you may want to offer a different role, as well as job training benefits. Sometimes, this training can even be covered by workers’ compensation.

Additionally, a return-to-work program can help retain high-quality employees and boost employee satisfaction.

For example, if your IT professional was injured while installing a TV, he may want to train for a desk job monitoring the company’s network security. If your hair stylist can no longer stand all day following a hip injury, she may be interested in a receptionist role.

The best thing to do is to talk to your injured employee, gauge their interest, then work together to find a comparable solution.

Unfortunately, deaths at the workplace can happen too. If you experience this tragic and unfortunate situation, know that workers compensation benefits will go to your employee’s family in the form of a death benefit.

This type of benefit can be used to pay for a funeral, burial, and other end-of-life expenses. It’s just one way to compensate loved ones for their loss.

Workers’ Comp Insurance Cost: How to Save on Your Policy

Choosing a workers’ compensation policy isn’t as daunting — or as expensive — as it might seem. Promise. There are even a few ways you can save on coverage.

The first way is to prioritize safety guidelines in the workplace. You’ll earn a reputation for a secure and healthy workplace, and you may receive a lower quote for insurance.

To keep your company operating as safely as possible, we recommend putting the following procedures in place as soon as you hire your first employee — or even earlier:

  • Health and safety policies and procedures
  • Safety training for employees
  • Regular workplace safety inspections
  • Maintenance and cleaning of machinery and tools

Also, if your employees operate a motor vehicle for work, you may want to check their driving records, allowing you to evaluate their on-the-road performance, and subsequently conducting training. That’s because some of the most dangerous and costly workers’ compensation claims involve motor vehicle accidents. In 2020, the Insurance Information Institute found that 37% of all workplace deaths involved transportation related accidents, including motor vehicle crashes.

The reality is that many workplace injuries and accidents, including motor vehicle accidents, can be prevented. As an employer, if you do your job ahead of time, you can help prevent many issues before they occur.

You also can help lower your workers’ comp insurance cost by calling one of Simply Business’s insurance experts. After all, that’s what we’re here for. Just give us a call and we’ll walk you through how to get workers comp at a fair price.

When you talk to someone on our team, we’ll consider insurance provider options that take into account:

  • Your industry. Some industries carry a higher risk than others. If you work in construction, manufacturing, or have employees who operate motor vehicles, for example, you may need to carry additional coverage.
  • The number of employees at your business. The more employees you hire, the higher risk your business carries. We’ll take into account the number of employees you have, as well as your business’s potential for future growth.
  • Your business’s location. Additional locations can add more risk, whereas smaller businesses may not always carry as much risk. Keep in mind, this isn’t always the case.
  • And much more. There are many factors that can determine your business’s risk for a workers compensation claim. It takes a one-on-one conversation with a good insurance representative before we can truly understand your business and offer a solution that’s specifically designed for you and your price point.

It’s also important to do some research on your end beforehand. Try to have a basic understanding of your state’s guidelines, as well as a rough idea of how much coverage you’re considering buying for your business.

Finally, talk to your insurance representative about your company’s safety protocols and procedures. Remember that these guidelines can impact the cost of your policy.

If you’re ready to nail down a workers compensation policy today, don’t delay. A member of our team is ready to help you out and make it as easy as possible to secure coverage. Just give us a call at 855-930-2844. We’re here for you.

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Emily Thompson

I earned a B.A. in Journalism from the University of Wisconsin at Madison (go Bucky). After realizing my first job might involve carrying a police scanner at 2 am in pursuit of “newsworthy” crimes, I decided I was better suited for freelance blogging and marketing writing. Since 2010, I’ve owned my freelance writing business, EST Creative. When I’m not penning, doodling ideas, or chatting with clients, you’ll find me hiking with my husband, baby boy, and 2 mischievous mutts.

Emily writes on a number of topics such as entrepreneurship, small business networking, and budgeting.