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.
From a lifting injury at a group home to a dodgeball injury at an after-school youth program, your staff may be vulnerable to major risks while lending a helping hand. These common injuries can result in high-cost medical bills and downtime.
Workers’ compensation can pay medical bills for an injured employee or volunteer, along with partial missed wages.
Typically included in a workers’ compensation policy, employer’s liability insurance offers protection when a worker sues over an injury. For instance, a staff member at a nursing home could file a lawsuit claiming that poor building maintenance led to an injury on a stairwell.
Employer’s liability insurance can help cover:
Without this coverage, your social services business may have to pay for legal expenses out of pocket, even if you're not at fault.
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
Each state creates its own laws for workers’ compensation requirements. For example, every human services organization in New York must carry workers’ compensation insurance 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 self-employed or independent contractors, sole proprietors, and partners don’t have to carry workers’ compensation insurance, you can purchase a policy to protect yourself, too.
Your state will also set rules on whether volunteers must be covered by workers’ compensation.
In certain states, human and social services organizations 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, this policy can be purchased from a private insurer to fill this gap in coverage.
By maintaining a safe work environment and managing your organization’s risks, you can reduce the likelihood of workplace accidents. That means less claims – and a lower insurance premium.
Workers’ compensation insurance protects your staff and to some extent your business, but it doesn’t cover client injuries or property damage. Other recommended human and social services insurance policies include:
General liability insurance: This policy can cover expenses related to client injury and property damage at your social services business.
Business owner's policy: A BOP bundles general liability insurance with commercial property insurance at a lower rate than if the policies were purchased separately.
Professional liability insurance: Also known as errors and omissions insurance or malpractice insurance, this policy can help cover legal expenses if your organization is sued for an alleged mistake or negligence.
Directors and officers insurance: D&O insurance protects your board members from legal expenses if they are sued for mismanagement of funds or other poor decisions.
Commercial auto insurance: Most states require this policy for vehicles owned by social services organizations. It helps cover costs when a business-owned vehicle gets into an accident.