Did you know that in 2011, the most disabling workplace injuries and illnesses amounted to $55.4 billion in direct U.S. Workers’ Compensation costs? The 2013 Liberty Mutual Workplace Safety Index broke down its findings into the most common and costly workplace ailments (ranked from most to least expensive):
- Overexertion involving outside source ($14.2 billion).
- Falls on the same level ($8.6 billion).
- Struck by object or equipment ($5.6 billion).
- Falls to lower level ($4.9 billion).
- Other exertions or bodily reactions ($4.2 billion).
- Roadway incidents involving motorized land vehicles ($2.4 billion).
- Slip or trip without fall ($2.1 billion).
- Repetitive motions involving micro-tasks ($2 billion).
- Struck against object or equipment ($1.6 billion).
- Caught in/compressed by equipment or objects ($1.6 billion).
It makes you wonder: could your business survive these costs if it didn’t have Workers’ Compensation Insurance to fall back on? For most small-business owners, the answer would be a swift and resounding “no.”
After all, the average cost of a 2010 lost-work claim was $65,000 in California. (Read more in the Sacramento Business Journal’s article.) That number doesn’t even include medical costs.
But if you need a few more reasons to justify the cost of Workers’ Compensation Insurance, keep reading. We’ll examine how the coverage protects your employees, your business, and your bottom line.
Why Workers’ Comp Makes a Difference
Occupational injuries are more than just a financial burden. They can hurt employee morale, put your operations behind schedule, and foster an unfriendly work environment.
Here are some ways Workers’ Compensation Insurance can help manage these side effects of workplace injuries and illnesses:
Protects employees from paying for ailments they sustained while doing their jobs.
Imagine how hard it would be to retain your business’s top talent if accepting a position meant they’d also accept any physical risks that come with the job. Most people look at jobs as a means of financial security – not a source for potential economic setbacks.
Having adequate occupational injury coverage helps you attract employees and keep your team, even when tragedy strikes. That’s because Workers’ Comp provides hurt employees with…
- Medical treatment (e.g., surgeries, medications, doctor visits, etc.).
- Wage replacement (about two-thirds of their wages while they are on temporary disability).
- Vocational rehabilitation.
- Death benefits (e.g., funeral expenses and support payments to dependents).
Read more about employees’ Workers’ Comp benefits in our post What Do Workers’ Comp Benefits Cover?
Instills trust between worker & employer.
When your employees know they can count on your company to help them when an unexpected work injury threatens their health, you build trust between your business and its workforce. Other employees will see how well your company cared for an injured worker, which builds morale – even in the aftermath of a tragic accident.
Prevents business bankruptcy when injuries / illnesses happen.
Workplace accidents are costly for employers, too. In fact, lost productivity from workplace injuries and illnesses totals $60 billion a year. In 2004, approximately 120 million workdays were lost thanks to on-the-job deaths and injuries. (To learn more about these stats, read The American Society of Safety Engineers’ article, Impact of Accident Costs on Businesses.)
Consider that, in addition to the hours and days of lost productivity, you had to pay for your employees’ medical bills out of pocket, too. According to the National Council on Compensation Insurance, the average medical-only claim cost about $28,000. And if you’re like most small-business owners, you may not have that extra money lying around when a sudden slip-and-fall accident lands your employee in the hospital.
Another way Workers’ Comp spares your business from the high cost of occupational injuries is through its secondary coverage: Employer’s Liability Insurance. Should your employee waive their Workers’ Comp benefits, they could decide to sue your business for the injury. When that happens, Employer’s Liability pays for…
- Attorney’s fees.
- Damages or judgments.
- Other court costs.
Promotes a safe work environment.
Carrying Workers’ Comp is a given for most small businesses with employees. But every time a claim is made on your policy, your premiums may increase. Because you can’t forego coverage and you also don’t want your rates skyrocket, you have plenty of incentive to create a safer work environment for your employees.
This might mean implementing safety-training programs for your subcontractors or purchasing ergonomic gear for your copywriters. For more ideas, be sure to check out our post How to Prevent Workers’ Compensation Claims.
Ensures your business complies with state laws.
If you live in any state other than Texas, know that carrying Workers’ Comp isn’t just a wise business move – it’s also your legal obligation as an employer. For some states, the mandate kicks in when you hire a certain number of employees. In other states, you must have a policy in force as soon as you hire one full- or part-time employee.
You can learn more about your state’s regulations in our guide Workers' Compensation Insurance Laws by State.
This post is part of an ongoing series on Workers’ Compensation Insurance and the high cost of occupational injuries. Stay tuned for more on how to handle work injury claims, adhere to state Workers’ Comp laws, and find affordable coverage!