As you have established your new business, you have likely heard the term workers comp, but what is workers compensation insurance and why exactly do you need it? The world of business insurance can be confusing at first, but understanding a few basics on these policies can help you get started.
What Is Workers Compensation Insurance?
As an employer, you strive to maintain a safe and healthy work environment. However, accidents can happen. These insurance policies provide employees with the support they need if they are injured on the job. The programs cover health costs and wage replacement, and employees are covered without factoring in fault. When covered by these policies, employees forfeit the right to sue.
What Are the Requirements?
State laws vary, but most states require some level of protection. States determine the required level of coverage based on the type of work, the industry and the number of employees. Looking at the U.S. Department of Labor policies in your state can help you determine what you need.
Why Is It Important?
It may be tempting to forgo coverage. However, failing to follow state guidelines can lead to heavy penalties. You may also be subject to covering the costs of employee injuries and illnesses out of pocket. Even more importantly, without coverage, your employees have the ability to sue for large sums of cash. Workers compensation is essential to protecting your company.