Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.
Even in the relatively low-risk field of consulting, your employees are still susceptible to repetitive motion injuries, slip-and-fall injuries, and other accidents. Your business could be exposed to serious legal and financial consequences if you are held liable.
Workers’ compensation insurance provides coverage in three primary areas:
If an employee suffers an injury at your consulting office, you could be held responsible for medical expenses. Workers’ compensation insurance helps cover:
An employee who trips because of dim lighting, clutter, or a broken step could accuse your business of negligence. If your consulting firm is sued for failure to provide a safe work environment, employer’s liability insurance, typically included in workers’ comp, can compensate your business for:
The amount you pay for workers’ compensation is a specific rate based on every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and your payroll (per $100).
The formula is:
Classification rate x Experience modification rate x (Payroll / 100) = Premium
In most states, consulting firms must provide workers’ compensation insurance as soon as they hire their first employee. Without this policy, you can face heavy fines and even jail time.
Each state sets its own requirements for workers’ compensation. For example, every consulting business in New York must carry workers’ compensation for its employees – even part-time workers. However, Alabama businesses are only required to carry workers’ compensation when they have five or more employees.
While independent contractors, sole proprietors, and partners don’t have to carry workers’ compensation insurance, you can purchase a policy to protect yourself, too. It's a good idea to carry this coverage for financial protection against work injuries, which health insurance might not cover.
In certain states, consulting businesses must purchase workers’ compensation insurance through a monopolistic state fund. Those states are:
If you purchase workers’ comp through a monopolistic state fund, it may not include employer’s liability insurance. However, you can purchase it from a private insurer to fill this gap in coverage.
Even office workers are at risk for an injury. They could slip on a wet floor or trip over a power cord. If one of your consultants is injured on the job, it could lead to an insurance claim — and a rise in your premiums.
Whether you work in HR, market research, or management consulting, you can mitigate risks by providing safety training and maintaining a safe work environment. Taking these steps could reduce workplace injuries along with insurance rates.
Workers’ compensation insurance covers employee injuries, but it does not provide coverage for many common business risks. It's important to consider protection against client injuries, business property damage, and other risks.
Other recommended policies for consultants include:
General liability insurance: This policy can cover expenses related to common accidents, including third-party injuries, client property damage, and advertising injuries.
Professional liability insurance: Also called errors and omissions insurance, this policy covers legal costs related to business mistakes or decisions that resulted in revenue loss and legal action by a client.
Business owner’s policy: A BOP bundles general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.
Fidelity bonds: Fidelity bonds reimburse clients if an employee at your consulting firm steals from them. They're often required by client contracts.
Cyber liability insurance: This policy provides financial protection against data breaches and cyberattacks. It also provides liability coverage for consultants who recommend software or are responsible for cybersecurity.
Are you ready to safeguard your consulting firm with workers’ compensation insurance or another policy? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.