Everyone who runs a business and is employed must have Worker’s Compensation Insurance. It is of mutual benefit to both employers and employees. Moreover, it is a sign that the organization considers its employees an asset. Like any other asset (car or machinery), the employee’s welfare activities at the office must be safeguarded through Worker’s Compensation Insurance.
First, Worker’s Compensation Insurance is available in all fifty states. Yes, the compensation policy or benefits differ from state to state. Nonetheless, any business with more than two to three employees must award Worker’s Compensation Insurance to every worker. Still, then again, the nature of Worker’s Compensation Insurance benefits varies from state to state, as previously said. For example, in Iowa, only physical injuries arising out of occupational hazards are covered within the ambit of Worker’s Compensation Insurance. Meaning that non-physical ailments are not covered, such as allergies, heatstroke, or nervous breakdown, in Worker’s Compensation Insurance, but that is limited only to the state of Iowa.
Various industries are high-risk and are classified accordingly. The higher the classification, the higher the premium rate the insurance provider charges. For example, classification can be of two types – one that may be impregnable to physical injuries at work or stress-related ailments (non-physical) at the workplace — industries such as construction, nuclear plants, toxic chemical plants, leather tanneries, and others.
Worker’s compensation insurance requirements vary from state to state. Hence, jurisdiction plays an especially important role. You can start by reviewing your state’s relevant Worker’s Compensation Act. So, in California, for instance, a business with just one employee has to offer worker’s compensation insurance, while in Alabama, a business must have at least five employees before it is legally required to offer such compensation. Interestingly, New Jersey, Texas, and South Carolina businesses are not legally required to provide worker’s compensation!
The business owner will do some preliminary homework to inquiring their associated insurance agents. They would want to find out more about the laws, scope, and procedural requirements of worker’s compensation insurance as it varies from location and state to state. For instance, if you are an owner of a business firm and are involved in providing consulting services with staffing of three or more, then having a policy coverage of worker’s compensation insurance is compulsive. The same condition may be applicable in Georgia, but it is not mandatory for firms operating in Florida. Secondly, the origin or nature of the business comes into play. If you are involved in a business concerned with construction, no matter how small or large the human resource is, worker’s compensation insurance is mandatory.
Albeit, some other conditions will apply if you are in a non-construction-related business.
The fundamental concept of having worker’s compensation insurance is to safeguard the interests of the organization and personnel, but then again, it may not be taken as a yardstick. For example, in the state of Texas, there is ample relaxation for businesses. Although the laws regarding worker’s compensation insurance are not stringent, many companies still prefer to have worker’s compensation insurance for their workforce.
Next, look at what your compensation program needs to offer. The general requirement is to cover the costs of first aid, medication, hospitalization, surgery, rehabilitation, training, and loss of income. In case of death, worker’s compensation also covers funeral costs and even support payments. At the same time, worker’s compensation does not compensate you for the expenses of hiring a replacement for the injured worker or any costs you might have to pay a customer because of the accident. Your local worker’s compensation Act will spell out the mandatory coverage in your state.
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