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How Workers’ Compensation Insurance Protects Businesses

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Whatever your size from startup, to small business to large corporate, as a business owner, or CEO your many responsibilities include protecting the company against lawsuits and that includes litigious employees.

Workers’ compensation insurance is for the employee. It provides support with wage replacement and medical benefits when employees are injured at work. There’s a more detailed account of workers compensation explained here.

Although workers’ compensation is technically designed to protect workers, it also provides protection for businesses. It can shield your business from lawsuits filed by employees who claim that you or an employee you hired caused an on-the-job injury and also fines.

Protects The Business From Fines

For starters, it protects you from fines. All states, with the exception of Texas, require businesses to have workers’ compensation insurance.

If an employer fails to obtain Workers’ Compensation insurance, they are subject to administrative fines and potential criminal liability and premium penalties and may be ordered to close business until insurance has been obtained and will be held financially responsible for all costs arising from a work-related injury.

The quote above is from Jason D. Mills & Associates

With adequate workers’ compensation insurance cover your business can also be protected in other ways let’s look at a couple of them.

Limits Legal and Financial Liability – Work-Related Injury or Illness

Employees get extensive cover including: medical care for illnesses or injuries; vocational training, income replacement, funeral expenses and death benefits if the employee is killed on the job; and in return employees are prohibited from suing employers for on-the-job injuries, except for cases of gross negligence that leads to an employee’s death.

When your business has the right level of cover, it’s not liable for:

  • Medical costs
  • Lost wages
  • Fines for not having coverage
  • Damages incurred by the employee, which may include pain and suffering, punitive damages and loss of life enjoyment

Gets Employees Back to Work

Workers’ compensation ensures that workers receive the medical care and rehabilitation they need to get back to work.

Thus when an injured employee’s needs are met, they are more likely to remain in the job and with the company so it’s a win win for all parties.

An absent worker no doubt puts more pressure on everyone in the business, especially if it’s a small business. Ideally a temporary hire can fulfil the role in the interim.

Implementing an effective transition program, is also wise as it will speed up the the injured employee’s return to work while ensuring they are able to handle all their tasks safely.

Summary

With adequate workers’ compensation insurance, employees have the security and peace of mind that they will be taken care of if they are injured on the job.

For businesses irrespective of size, having the right level of coverage is professional and it shows that you are a responsible employer who cares about your employees.

Not all states in USA make the cover mandatory so if your business is located in a state that doesn’t require it,
your business will be attractive to new staff hires and secure employee loyalty.

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