According to the Bureau of Labor Statistics (BLS), 3.4 workers’ compensation claims are submitted for every 100 full-time employees each year.
Having insurance for your startup is one of the most important aspects to pay attention to. Two insurance types that are advised for startup owners to invest in are General Liability Insurance and Workers Compensation Insurance.
General liability insurance, also known as commercial general liability insurance (CGL) and LLC general liability insurance, is a basic insurance policy that protects your small business’s assets from a variety of dangers. To find out what General Liability Insurance covers, read more here.
Workers Compensation insurance for startups is an important part of your insurance portfolio that will help your company run successfully. If your employees suffer a work-related injury or sickness, Workers Compensation will pay their lost wages. As a beginning company, it is unquestionably an insurance policy to consider.
What does Workers’ Compensation Insurance Cover?
If your employees suffer a work-related injury or illness, Workers’ Compensation Insurance will cover their missed wages. The lost wages, medical bills, and even disability and burial benefits can be reimbursed regardless of how the damage occurs. The only stipulation is that it has to happen as a result of their work. If a worker injures his or her back at home and then comes to work and injures it, even more, he or she would most certainly be denied because it was a pre-existing condition.
Risks of Starting a Business Without Workers Compensation Insurance
Since you’re a startup, the most important thing is to make money, which means decreasing costs anywhere you can. To save money, many business owners turn to their insurance coverage first. While adjusting coverage limits and deductibles can sometimes help, Workers Compensation is not usually the place to search for cost savings.
Here are some of the consequences of not providing this vital coverage to your staff:
Legalities in Your State
Workers Compensation Insurance is required in most states. Each state has its own set of rules and regulations. Some states only require it if you have a particular amount of employees, while others don’t require it at all for small enterprises. It’s advisable to consult with a knowledgeable insurance agent who is familiar with state regulations and can guide you through the procedure.
Employers’ Liability Insurance
While Workers Compensation insurance covers employees, it also protects you as a business. Even if you run a family business, you can’t count on them not to sue you. This coverage will cover the costs of defending you in an employment-related lawsuit. This usually occurs when an employee believes that you, as the employer, were irresponsible and as a result, they were injured. It will also cover settlements and judgments in addition to defense costs.
You may believe your company is immune to harm or illness. Even those who work at a desk all day are vulnerable to injury. Carpal tunnel syndrome, which is caused by repetitive typing and writing, is a common Workers Compensation claim. Also, if you leave something in the bathroom walkway, such as an empty box, there’s a risk they’ll trip over it. Unexpected events can occur in any industry, and it is best to be prepared and equipped to support your staff. If your employee is injured on the job, you will undoubtedly be held liable, so avoid a lawsuit.
Is Workers’ Compensation Insurance Necessary?
There are certain exceptionally rare instances in which a startup will have no workers. However, depending on the business, a contract may need it even in these cases. For example, a contractor who is a sole proprietor with no workers may bid on a job for a general contractor, and the general contractor will want Workers Compensation coverage simply because it is required by their standard contract. It will be something the contractor must have in order to get the work done.
Furthermore, most states require firms to have Workers Compensation insurance, and you should make every effort to comply with all state regulations.
With the exception of Texas, most states require companies to get this coverage. Noncompliance can lead to jail time, huge fines and fees, and even stop-work orders. The excitement of starting a new business is swiftly tamped down by the fear of incurring expenses. While paying for insurance may seem like another expense you don’t want to undertake, it is better to do so in order to avoid an expensive lawsuit. Your employees rely on you to not just pay their bills, but also to protect them from harm and disease. Consult an experienced insurance agent to ensure that you have adequate coverage.