As a small business owner, you may be wondering, “What is workers’ compensation insurance?” Workers’ compensation is a separate policy that business owners need to purchase in addition to their standard commercial insurance package. It covers various costs associated with accidents and injuries that occur on the job.
Workers’ Comp in a Nutshell
This policy allows employees who are injured on the job to receive compensation for their injuries and loss of time at work without having to sue their employers to get it. As a result, it protects employers from the costly process of litigation. It also keeps employers from having to pay injured employees’ expenses, such as medical bills, out of pocket. The cost of the policy itself can vary based on a number of factors:
- Number of employees needing coverage
- Industry hazard level
- State standards
- Claims history
Who Needs a Workers’ Comp Policy
Not every business is required to purchase workers’ compensation insurance. Some states allow certain employers to opt out. Typically, sole proprietors or businesses that are run solely by the owners are also not required to buy it. It is advisable, however, for any business owner who employs other people to have adequate workers’ comp coverage.
What is workers’ compensation insurance? It’s the policy that helps make both employees and employers whole again after a workplace accident.