Running a small business comes with various responsibilities and challenges when managing its workforce. This involves prioritizing the well-being and safety of their employees.
One way to do this is by having a workers compensation plan to protect the business and employees when accidents at work occur. Although many small business owners may consider worker’s compensation unnecessary, it offers crucial protection for employees and the business.
Here’s why small businesses need workers compensation insurance and how it can benefit both the employees and businesses.
Workers compensation insurance for small businesses: what is it?
Workers compensation insurance is a business insurance that covers lost wages and medical expenses for employees who suffer injuries or fall ill while on duty. It also protects the employer from liability related to employees’ injuries. Most states in the U.S. require businesses to carry this insurance, and failure to comply with state workers comp laws can result in severe penalties, hefty fines, and even imprisonment for a business owner.
Small businesses need workers’ compensation insurance for the following reasons:
Compliance With Laws
All businesses, including small ones, need workers comp to ensure they meet the legal obligations imposed in their respective states. This helps them to avoid non-compliance consequences, such as penalties and criminal charges.
Protection For Employees
Workers’ compensation insurance protects employees who get injured or become ill while on the job. Employees can receive compensation for medical expenses and lost wages if an accident occurs at work.
Protection Against Lawsuits
By carrying workers compensation insurance, small businesses protect themselves against lawsuits by affected employees. The insurance coverage provides financial compensation to the employees, and in turn, they are limited from seeking legal action against the business.
Reduced Financial Risks
The financial risk associated with workplace injuries can be significant for small businesses. Catastrophic injuries or illness can drain a small business’s financial resources if it has to compensate employees out-of-pocket, which can even lead to bankruptcy. Workers compensation insurance reduces this risk by providing coverage for medical expenses and lost wages, acting as a safety net for the business.
Improving Employee Morale
If your employees are aware that they are covered in case of a workplace injury or illness, they are more likely to be productive and satisfied with their job. This can help attract and retain high-value employees, which is especially essential for small businesses with limited resources.
How much do workers comp insurance cost?
The cost of workers compensation insurance for small businesses varies depending on factors like location, total payroll, type of work, and claims history. However, businesses can reduce these costs by working with an insurer that only insures small businesses.
They can tailor the coverage options to the small business per its unique needs and challenges.
Working with an insurer can lead to cost reductions of 20-30%, sometimes even 50%, a big save for small businesses that can allow them to allocate their resources more efficiently.
Workers Compensation Insurance For Small Businesses
Workers compensation insurance is a vital investment for small businesses. It not only ensures that employees are protected but also protects businesses against lawsuits, ensures legal compliance, reduces financial risks, and improves employee morale.
Small businesses can create a thriving work environment by prioritizing employee well-being and security. With insurers who specifically provide workers comp coverage to small businesses, every small business owner should consider purchasing this insurance policy for their business.