Workers’ Compensation Insurance 101

If you’re starting a business and are unsure of the purpose of workers’ compensation insurance or how to acquire it, then you’ve come to the right place. This kind of state-mandated insurance covers “medical and rehabilitation costs and lost wages for employees injured or fallen ill at work due to working conditions.” Read on to learn more about workers comp insurance.

What is Workers’ Comp Insurance?

For employers, this kind of insurance helps you avoid potential lawsuits filed by employees injured on the job. Workers’ comp covers expenses during an employee’s period of injury or illness and takes “care of their dependents in case of death.”

While it is a state-mandated insurance in a majority of states, the requirements do vary from one state to another. Some states always require it while others only require it depending on the number of people employed by your business. In general, “sole proprietors and partnerships aren’t required to purchase workers’ compensation insurance unless and until they have employees who aren’t owners.”

What Workers’ Compensation Insurance Won’t Cover

Although workers’ comp covers a wide-range of circumstances, there are limitations to its coverage. For example, employers can deny an employee benefits if:

  • drug and alcohol tests demonstrate that individual was “under the influence at the time of the injury”;
  • “the injuries were self-inflicted”;
  • the employee was “violating a law or company policy” at the time of the incident; and
  • the employee wasn’t “on the job at the time of the injury.”

The majority of employees are covered by this insurance but there are some workers who don’t fall under this kind of coverage, including:

  • Independent contractors
  • Business owners
  • Volunteers
  • Individuals employed in private homes
  • Farmers and farmhands

Protect Your Business With Workers’ Comp Insurance from First Bank

At First Bank, we know business owners are always looking for the most cost-effective solution. That’s why First Bank Insurance Services* offers you a custom designed insurance program that helps you identify your exposures and protects you and your employees at an affordable cost. To learn more, fill out this form online.


*Investment and Insurance Products are NOT Bank Deposits, NOT FDIC-Insured, HAVE NO Bank Guarantee, NOT Insured by any Federal Government Agency, May Go Down in Value.

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Sources:

Entrepreneur: http://www.entrepreneur.com/encyclopedia/workers-compensation-insurance

Financial Web: http://www.finweb.com/insurance/state-workers-compensation-insurance-the-advantages-disadvantages.html#axzz3a9fuvRlu

NFIB: http://www.nfib.com/article/workers-compensation-laws-state-by-state-comparison-57181/

Find Law: http://injury.findlaw.com/workers-compensation/workers-comp-benefits-explained.html