There are many questions to confront when starting up your first small business like, “what is workers compensation insurance?” Workers’ compensation insurance helps to protect you and your employees from the unexpected. It is actually a requirement in most U.S. states.
What is Workers Compensation Insurance?
If one of your employees is injured on the job, workers’ compensation insurance covers the medical and rehabilitation costs associated with the injury. This allows everyone to have peace of mind. Many plans require that employees forfeit their right to sue your business for negligence. In return, they receive the medical attention they need.
What Does Workers Compensation Insurance Cost?
You should carry workers’ compensation insurance first and foremost because your state probably requires it. There are stiff penalties associated with not having it. Requirements vary from state to state, but in most instances, self-employed individuals and farming employees are exempt.
The Workers Compensation Board in each state determines costs. Typically, a standard formula is used to calculate rates: risk classification multiplied by 1% per $100 of an employee’s payroll. Two factors determine a position’s risk classification: frequency and severity of injury. Your business’s safety history can lead to increases and decreases in the cost of coverage.
As a small business owner, you have a lot to worry about. Don’t let the risk of a lawsuit or unnecessary penalties be on that list. Your employees are like family. Provide them the coverage they need to fell protected.