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What You Need to Know About Workers' Compensation

Worker in a hardhat standing between 2 large pipes

Workers’ compensation insurance may seem like just another business expense, but it’s one of the most important investments you can make in your company. Plus, it’s required in most states.

Workers’ compensation insurance – often referred to as workers’ comp – generally covers medical expenses and lost wages when your employees get injured on the job.

What Kind of Injuries are Generally Covered with Workers’ Compensation Insurance?

Workers’ compensation can help cover certain costs related to injuries sustained by employees in the workplace:

  • Work-related accidents
  • Violence in the workplace
  • Stress-related mental injuries such as PTSD
  • Occupational illnesses
  • Repetitive stress injuries

It’s important to understand that the commercial general liability insurance your company may hold generally applies to injuries sustained by parties not employed by your company and that workers compensation is the insurance that covers employees.

What Types of Benefits Does Workers’ Comp Include?

Once a sick or injured employee files a covered workers’ compensation claim, he can receive funds to help pay for his medical treatment and recover his lost income until he returns to work. Some other benefits may include:

  • Cost savings on medical bills and services
  • Return-to-work programs
  • Diagnostic services
  • Assistance with navigating the medical system

How is Workers’ Compensation Premium Determined?

The amount you pay will vary based on the nature and size of your business, its location, and any potential risks. Costs are typically determined by the following factors:

  • Your total payroll. The bigger your payroll, the higher your workers’ compensation premiums will be.
  • The kind of work your employees do. Your business will be assigned a numeric classification code from a standardized list of industries, which is then used to recommend a baseline rate. For example, construction work is perceived to have a higher risk than accounting or administrative duties, so it will likely result in a higher premium.
  • Your workplace location. If your business is in a highly regulated, worker-favored state, you can expect to pay higher premiums than in other regions.
  • Your business history. Is your company brand new? Do you have a history of previous claims? In these cases, your workers’ comp costs could be higher, especially in your first few years of business. But if you’ve been in business for years and can show you’ve had no claims, you could be charged lower premiums.

Who May be Covered?

The definition of “employee” may vary by state, but often it includes direct employees.  In some circumstances, it might also include uninsured contractors and subcontractors – unless they qualify as an independent contractor. In some cases, staff who are immediate family members of the owner or who work only on commission may be exempt. Some states require workers’ compensation insurance only if the business has at least three employees.

You’ll want to familiarize yourself with the regulations in the state(s) where you have employees. An independent insurance agent who specializes in the workers’ comp market can help you evaluate who must be insured.

Westfield Insurance can Help

When you have options, it is best to have help when selecting workers’ compensation coverage, especially if your business is crossing multiple state borders or has had claims before. Westfield agents are highly skilled at gathering the information needed so you can choose a workers’ comp policy best for your business. Find a Westfield agent near you.