Having an employee injured on the job is every employer’s worst nightmare. Sadly, it is a scenario that can and most likely will occur throughout your business’s history. Thankfully, this is where workers’ compensation comes in to protect both employers and employees.
Read on to learn more about how workers’ compensation is a win-win for employers and employees:
What is Workers’ Compensation?
Before looking at how employers and employees can benefit from workers’ compensation, it’s important to define what workers’ compensation means. In the case of a work-related injury or illness, workers’ compensation coverage provides for employees’ medical expenses and can assist in replacing their wages. In addition, in most states, employers are legally required to carry this type of insurance, although specific state requirements do vary.
A Win For Employees
The following is a look at the ways workers’ compensation can be a win for employees:
Employees can receive workers’ compensation benefits based on the nature of their injury, state requirements, and their policy. This means that if an employee is injured on the job, this coverage will provide them with needed benefits.
Employees can also receive vocational rehabilitation, compensation for permanent injuries, and even survivors' benefits. This is important because if an employee is injured on the job so severely that it impacts their ability to work in the future, this type of insurance protection will provide for them, allowing them to focus on recovery.
In addition, if the absolute worst happens, and an employee loses their life, then this coverage will provide benefits to their family in the way of survivor benefits. Of course, no insurance policy can ever bring back a loved one or equal their impact on a family. However, this does provide some measure of provision when a terrible situation occurs.
A Win For Employers
While it can almost go without saying that workers’ compensation could benefit employees who have to use said coverage, it can also positively impact employers as well. The following are some reasons why workers’ compensation is actually a win for employers as well:
Workers’ compensation is designed to protect against accidents and illnesses sustained on the job. Therefore, this type of coverage can actually protect employers from the financial liability that such a situation would bring about. This means that should an employee sustain an injury or illness as a direct result of their job, this insurance coverage could prevent an employer from losing their business and/or everything else they own to try to make it right.
The insurance payout will take care of the compensation that is rightly deserved by the employee, freeing the employer to continue operating their business.
What About The Costs?
As outlined above, workers’ compensation is win-win for most employers and employees. Add to this the fact that it is also a mandated requirement, and it just makes sense that most business owners at some point will be looking into this type of protection for their business and employees. However, what the plan will cost an employer or business is determined by many factors as not all businesses and/or industries are created equal in terms of risk and therefore will vary in how much they have to pay for such coverage.
Read on to learn about the most common factors that will alter the cost of workers’ compensation coverage:
The Industry
As mentioned previously, not all businesses are equal in terms of the risk that employees face. Obviously, the more physically demanding a job is or the greater the risk employees take, the higher the rates will be to protect them.
Consider the difference between the risk a construction worker might take versus an employee who sits at a desk and enters data into a financial system. They do not carry the same risk at all for injury or illness, so their coverage needs would vary, altering the cost.
Annual Total Payout
The larger your annual payroll, the larger the business, which means more employees to cover. Consequently, a large business will spend more on workers’ compensation simply because they have to protect so many employees. Of course, the larger the business, the more they are set to lose if an accident leads to some form of litigation. Therefore, workers’ compensation is immensely important for businesses with large payouts.
Claims History
If a business has a history of filing workers’ compensation claims, then their cost will likely be more when compared with other businesses that don’t have such a history. This is true even if the businesses are in similar fields or industries. How often claims are filed and how much they have paid out are big considerations when setting up the cost of workers’ compensation coverage.
It’s a Win-Win
As an employer, workers’ compensation is essential to protecting yourself, your business, and most importantly your employees. In addition, it can make a huge difference for an employee who has suffered an injury or illness on the job and is unable or hindered in some way from doing their job immediately again.
At Arnold Insurance, we understand the importance of this vital coverage and would love to speak with you more about how to get your business the protection you need. Being founded on hard work, ethics and determination, we know what it means to do the very best for your employees and understand the need to protect your business from the unexpected.