Do I need workers compensation insurance?
As a rule of thumb, the simple answer is yes, if you have even one employee. Now, workers compensation requirements differ from state to state with varying options. However, it is also prudent to carry workers compensation with even one employee if not required.
Workers compensation insurance covers medical, rehabilitation costs, and lost wages due to a job related injury or illness. Workers compensation benefits today are quite comprehensive and in addition to those noted, it also includes a death benefit. Unlike other insurance, there is no maximum dollar limit for the employer’s coverage. Required or not, the cost of a serious accident could financially cripple a business and it owners.
While again comprehensive and varying state to state, when the business carries workers compensation, the business is protected from a lawsuit by the injured employee as a result. This ‘no fault’ coverage allows for immediate medical attention and relief for the employer to ligation.
Failure to purchase required workers compensation insurance can be extremely costly. A business would be held to pay all the expenses and also face large fines and penalties. No prudent business owner should expose his business to such high risk. It is also important to note the definition of an employee. If you use subcontract labor take the time to determine how your state defines an employee.
Workers compensation insurance is complicated. Your state department of insurance can offer plenty of guidance and useful information. Talk to your licensed insurance professional as well and make sure your business is covered.