Even the most well-intentioned and safety-conscious small business owner can find herself with an injured employee. After all, there were close to 3 million workplace-related illnesses and injuries of the non-fatal variety in 2019 alone.
That means it’s less a matter of if one of your employees will end up with an injury and more a matter of when. This is where workers’ compensation insurance comes into the picture. If you started out as a solopreneur, though, you may find yourself a little hazy on the details of workers comp insurance.
If that’s you, keep reading and we’ll cover the essentials that you need to know about workers’ compensation insurance.
What Is Workers Compensation Insurance?
In the old days, employees injured on the job had to fight it out in court with their employers to get lost wages or cover health care bills. This was time-consuming and expensive for everyone involved. Eventually, states enacted workers’ compensation regulations that make employers carry insurance for employee injuries.
The insurance policies cover a range of things, such as:
- Health care costs
- Funeral costs
- Costs for ongoing care
These laws operate as no-fault laws, which means that employees get coverage without anyone taking the blame for injuries. The tradeoff is the employers face substantially reduced liability for those injuries.
Workers’ Compensation Insurance Cost
Every small business owner must carefully manage their costs in order to keep the doors open. That means you’ll want an idea of how much workers’ compensation will run you. For the reasons discussed below, the average costs only tell you so much.
As a general rule, though, you can expect worker’s comp to run somewhere around $2500 a year.
Assuming your business pays that average, you’ll need to budget around $210 per month to cover the premium.
Employees in different industries face varying levels of risk. A construction worker deals with a substantially higher level of physical risk than your average office worker. Loggers face more risk than construction workers.
Insurance companies know these statistics, so that means that construction firms will typically pay more per employee than an office-based business. The quote you get from an insurance company will factor in the risks, which can reduce or increase your premium.
You can also shop around with different workers’ compensation insurance companies and look for more affordable workers comp insurance.
Workers’ Compensation Insurance and Your Business
Virtually every state in the country requires private employers to carry workers’ compensation insurance. If you don’t carry it, you can face fines and probably a lawsuit if an employee gets injured. Carrying the policy protects your employees and protects you from liability.
Fortunately, many insurance companies offer workers comp policies. You can also routinely find policies built around small businesses. These policies may lack some of the bells and whistles, but they can save you on ongoing premium costs.
Looking to expand your knowledge base in other areas? Check out more of our articles before you go.