Written by Emily Bollinger Miller
Workers’ compensation coverage is a foundational piece of any business insurance program. This policy is required if the business has hired employees, and heavily encouraged if the business is utilizing un-insured sub-contractors or sole proprietors. A general rule of thumb to consider is the following: your workplace or worksite, your responsibility.
Worker’s compensation coverage provides coverage for injuries to employees arising out of, during, or in the scope of employment. The coverage provides payments for medical expenses, lost wages, rehabilitation, and death. It is a requirement that businesses provide this benefit to its employees. Failure to due so may result in legal action against the businessowner by its employees.
There can be non-traditional employment arrangements that justify worker’s compensation be addressed in a contract between a general contractor and a subcontractor. Failure to properly address the requirement of worker’s compensation in a contract between the two may result in added insurance costs and increased risk for the general contractor.
Typically, workers compensation coverage can be provided by the same company that provides general liability coverage. To obtain a quote, your agent will require basic information including the FEIN, the number of full and part-time employees, the categories of job roles, and the expected annual payroll amounts. There are also insurance companies that specialize in workers’ compensation exclusively. A business that promotes, encourages and invests in a safe workplace may be able to qualify for premium credits.
The business owner can elect to be excluded from or included in coverage. This is an important conversation to have up-front so that expectations are clear when an owner is injured within the scope of the business’ operations.
Another important factor when setting up coverage to consider is where the work is taking place. This can be obvious for a construction company that only renovates homes in Maryland and not so obvious for an employer that has employees working remotely in different states. Each state has separate workers’ compensation laws and payout tables. In theory, a broken arm in Maryland may cost more or less in medical or rehabilitation than a broken arm in Pennsylvania.
Commonly excluded from workers’ compensation policies are volunteer workers. If your organization relies heavily on volunteers, talk with your agent to explore additional options to cover injuries sustained by a volunteer.
A strong workers’ compensation program is crucial to supporting a safe workplace and protecting your most important asset, your people.
