Workman’s Compensation: 5 Things You Need to Know

The concept of workman’s compensation and the costs associated with it are often daunting notions for small business owners to consider, particularly when so many of their resources are dedicated to growing their company and increasing profit. While laws regarding workman’s comp do vary from state to state, there are a few key elements that every small business owner should know about the system in general.


1. Workman’s compensation is an umbrella term for four major types of coverage programs. These are medical treatment, vocational rehabilitation, compensation for lost wages, and other benefits as deemed necessary by the state’s appointed insurance company. The National Federation of Independent Business lists a detailed comparison of critical information by state and provides additional resources to owners of small businesses.


2. Most states in the U.S. require that all business owners who utilize the work of employees other than partners or co-owners purchase workman’s compensation insurance. In order to protect yourself from potentially costly legal ramifications in the event of a workplace injury, it is crucial that you verify whether or not your state mandates this type of coverage.


3. Even if your state does not require that your business carry workman’s comp insurance, it most likely still benefits your company to purchase it. Many qualified workers refuse to associate with a business that does not offer coverage, so you may miss out on the opportunity to hire a valuable employee if you are not willing to provide them with this peace of mind.


4. The premiums you pay for workman’s compensation insurance can vary depending on a number of factors. These include your business’s history regarding workplace injuries, safety measures implemented and followed, compliance with code and the level of risk your employees face while on the job. For example, an employee who works in an office setting every day and never travels for work-related purposes would garner a significantly lower premium than a construction worker or factory employee who uses heavy machinery daily.


5. Not all workman’s comp insurance providers are created equally. Many small business owners erroneously assume that the insurance plans that provide coverage to their employees are managed by the state itself, while the exact opposite is true. These policies must be purchased and maintained in the private sector, utilizing insurance providers that are typically appointed by the state but not controlled by it. Options may be limited, but never accept the first plan presented to you by the first provider that comes along. Through independent research and provider comparison, you can save up to thousands of dollars every year on your workman’s comp insurance.





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Susan Peters