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

Chapter 2: How Workers' Comp Insurance Works
Part 2: When Do Small Businesses Need Workers' Comp?

A recent survey New browser window icon. found that 35 percent of small-business owners are more concerned about workplace safety issues than they are about any of their other risks (including professional and cyber liability).

35% of small-business owners worry more about workplace safety than any other risk.

Perhaps this fear stems from the realization that employees are a small business's most valuable asset. Not to mention, employee injuries can lead to an avalanche of medical bills and lost productivity. All it takes is a small slip, trip, or fall to put your employees out of commission.

Consider the following stats, courtesy of the U.S. Bureau of Labor Statistics [PDF] New browser window icon.:

  • Slips, trips, and falls account for 15 percent of fatal workplace accidents and 25 percent of all nonfatal workplace injuries.
  • Transportation incidents cause 41 percent of work injuries.
  • Equipment malfunctions account for 16 percent of incidents.

Between all these risks that put your employees in jeopardy, it's no wonder that small-business owners are concerned about workplace safety. Luckily, that's why Workers' Compensation Insurance was created — to help employers address the cost of injured workers.

Though employers are wise to carry the coverage, it's not just a savvy business move. Most states require employers to have a Workman's Comp policy in force once they hire employees. The laws vary depending on where you live, but the majority of states mandate that you cover any full- or part-time employee.

Some exceptions apply. For example, Texas is the only state where Workers' Comp is optional. Other states, such as Florida and South Carolina, require that you carry coverage once you have four employees. Many states exempt farm workers, domestic employees, and seasonal or casual workers from the mandate.

Texas is the only state where carrying Workers' Comp coverage is optional.

In short, when you need Workers' Comp is variable. We suggest that you…

  • Check your state's Workers' Comp laws. You'll need to find out your legal obligations, including which employees you must cover and how much coverage you need.
  • Err on the side of caution. Even if you don't have to offer Workers' Comp benefits, you could still be held liable for your employees' occupational injuries. Workers' Comp coverage allows you to look after your employees and help avoid a lawsuit against your business.

If you have more questions about your Workers' Comp options, feel free to talk to an insureon agent. They can help you make sense of your state's laws and connect you with a policy that can fulfill your legal obligations.

Next: Part 3: Where Do Small Businesses Get Workers' Compensation Insurance?

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