What is workers compensation insurance?
Workers compensation insurance is a form of commercial coverage designed to provide financial benefits to employees who are injured or become ill while on the job. Unlike many other forms of commercial insurance, businesses are legally mandated to carry workers comp coverage and must meet their state’s specific requirements.
- What Does Workers Compensation Cover?
If an employee sustains an injury while working, workers compensation insurance will provide coverage for the employee’s medical expenses, lost wages, and rehabilitation costs. Additionally, if an employee dies in a workplace accident, then workers comp will provide death benefits to the employee’s family. Finally, workers comp also provide benefits for the employer as well. Should an injured employee waive their rights to workers compensation benefits in favor of suing their employer, then the employer can use these benefits to cover the cost of their legal defense and settlement.
- How Much Does Workers Compensation Cost?
States group similar businesses together to form classes. Each class’s rates are determined based on the prior five years of loss costs for all businesses within that class. A system called experience rating allows individual businesses to have more control over their workers compensation costs. This system allows businesses to reduce the cost of their coverage based on their claims history and safety.
- Why Do I Need Workers Compensation?
As previously mentioned, businesses are legally required to carry workers comp coverage. Companies that fail to secure this mandatory form of insurance will face penalties. Common consequences include having to pay for claims out of pocket, fines, possible imprisonment, and losing the right to operate a business in the state.
This is what you need to know about workers compensation insurance. Do you have additional questions about this commercial coverage? If so, then contact the experts at PMC Insurance Group. Our dedicated team is eager to assist you with all your business insurance needs today.