Three Reasons Why You Need Workers’ Compensation Insurance
At the beginning of the last century, individual U.S. states began implementing workers’ compensation laws requiring companies to provide wage replacement payments, medical expense reimbursements and other benefits to employees who suffer a work-related injury or illness. Although today specific requirements vary by state, most businesses with more than one employee are required by law to provide workers’ compensation benefits.
Having proper workers’ compensation coverage is more than just a cost of doing business. When considered as part of a comprehensive workplace safety program, it is a strategic investment in a business’ most important asset – its employees.
Here are three reasons why it is important for your business to have workers’ compensation insurance:
- It is required in most states. Because workers’ compensation requirements differ by state, it is important to understand what laws apply to your business. In most cases, businesses can fulfill their workers’ compensation requirements by purchasing a policy through a local agent or carrier. A few states, known as monopolistic states which include North Dakota, Ohio, Washington, and Wyoming, require businesses to secure coverage through state-operated funds. Currently, in Texas and Oklahoma, employers may be permitted to opt-out of traditional workers’ compensation insurance programs.1 However, in Oklahoma, recent litigation has resulted in the opt-out portion of the state’s workers’ compensation statute being ruled unconstitutional.
- It helps injured workers get the help they need. Even the safest workplaces sometimes experience incidents that result in an employee injury or illness. In fact, according to a Bureau of Labor Statistics report, more than three million non-fatal workplace injuries and illnesses were reported in 2014. Workers’ compensation coverage provides a safety net that helps injured employees get the medical and wage replacement benefits they may need.
- It protects your business. Workers’ compensation insurance helps businesses avoid the real cost of an employee’s medical expenses and lost wages following a workplace injury or illness. Without workers’ compensation coverage, the medical expenses associated with even one major workers’ compensation claim could cause irreparable financial harm. An experienced workers’ compensation insurer can provide access to valuable loss control services that may help reduce costly claims and keep premiums low. Through proactive professional claims management, it may also help your employees recover and return to work faster after an injury or illness – potentially saving you the costs associated with reduced productivity and the hiring of temporary workers.
Having proper workers’ compensation insurance coverage is a smart investment that protects your business and employees. Contact your local agent or carrier for more information and guidance on what you need to know to make sure your business is properly covered.
1. Workers’ Compensation Insurance, NAIC http://www.naic.org/cipr_topics/topic_workers_comp.htm
2. Jones, Stephanie. “Oklahoma’s Workers’ Comp Opt-Out act Ruled Unconstitutional.” Insurance Journal. http://www.insurancejournal.com/news/southcentral/2016/02/29/400248.htm
3. Employer-Reported Workplace Injury and Illness Summary, Bureau of Labor Statistics http://www.bls.gov/news.release/osh.nr0.htm