The Small-Business Owner's Guide to Workers' Compensation Insurance

Chapter 2: How Workers' Comp Insurance Works
Part 1: Demystifying the Policy: The Inner Workings of Workers' Comp

The mechanisms behind Workers' Comp coverage are similar to other small business insurance policies. Take a look:

  • The contract. Workers' Comp is still an insurance policy, i.e., a contact between you and your insurance provider. It outlines the obligations of your insurer (such as the types of claims it covers) as well as your obligations (such as how much time you have to file a claim).
  • Coverage limit. No insurance policies offer unlimited coverage. Your Workers' Compensation Insurance policy will outline the maximum amount of money that your insurer can pay for insurance claims. This number changes depending on your business's needs. However, a common limit among our clients is $500,000.
  • Premium. This is the amount of money you agree to pay in exchange for your coverage benefits. Depending on the terms of your policy, you may pay this monthly, annually, or biannually. The cost of your premium is dependent on several factors, which we outline below.

Next: How Are Your Workman's Compensation Insurance Premiums Calculated?

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