Workers’ comp insurance for small businesses pays an employee’s medical bills, lost income, disability benefits, funeral expenses, and more if they get hurt, sick, or even die from a work-related accident. And in exchange for premiums, employers are shielded from getting sued for workplace injuries.
When one of your employees is injured or sick for work-related reasons, workers’ comp pays many of the costs associated with getting them well again.
Insurance companies typically cover:
Workers’ compensation coverage is a must-have business insurance for most small companies. Besides protecting employees, workers’ compensation saves business owners from cleaning out business or personal bank accounts to pay bills related to a worker’s injury or illness.
Workers' compensation laws require most businesses with employees to have a workers' compensation insurance policy. You’ll likely need this coverage if you:
But there are exceptions, so it’s important to see the state's laws. Some states like Texas don’t require you to carry workers’ comp, while California says you don’t need it for family members working for you.
The national average cost of workers’ compensation is $1.07 per $100 of payroll. This figure includes payments for:
As a small business owner, your workers’ compensation insurance costs are ultimately determined by your:
You’re usually not required to carry workers’ compensation insurance if you’re self-employed or an independent contractor without employees. But even if that’s you, having this insurance may still be a good idea.
For one, your client might require it in their contract. For example, if an apartment complex hires you as an independent contractor to take on some small plumbing projects, they may ask for you to have workers’ compensation insurance coverage for yourself.
And if you get hurt while moving a water heater, it’s nice to have any ensuing medical bills paid for. Especially since most health insurance won’t cover work-related injuries and illnesses. You’ll also be glad to have some of your lost wages repaid while you take time off to recover.
Construction, transportation and warehousing and government contractors need workers’ comp the most. That’s because the National Safety Council's latest data shows these industries as being the most dangerous based on the number of deaths from workplace accidents in 2021. Here are the top ten most dangerous:
Workers’ comp is good to have because it provides you and your employees with financial security when a worker gets hurt or sick from their job. Here’s a closer look at how you both benefit from an insurance policy.
Workers’ comp covers your employees if they get hurt or sick during work hours, while a business owners policy doesn’t cover workers. Instead, it bundles other types of liability and property insurance products into a single insurance package. A business owners policy can offer protection for things like customer injuries, business property damage by wind or vandalism, and lost income when a fire closes your shop for weeks.
You could face heavy fines and penalties. For example, California can put you behind bars for up to a year, give you a fine of $10,000 or more, and hit you with penalties of up to $100,000 for not carrying workers’ compensation insurance when needed.
The process starts when an injured or sick employee reports what happened to their employer. The employer files a workers' compensation claim with their insurance provider or the state workers' compensation agency. The claim needs to include information about the employee's injury or illness and the events leading to it.
From there, the insurer investigates the claim to see the extent of the damage and if the employee's injury or illness is covered under the workers’ compensation policy. The employee can start receiving their workers’ comp benefits once the claim is approved.
Your employees deserve the best coverage, and Hourly makes it easy for you to give them just that. We use an affordable, pay-as-you-go workers’ compensation system in tandem with an automated payroll service, helping you conveniently pay and cover your employees without breaking the bank.
Get the latest news from Hourly and helpful tips to run your business