Workers Compensation

Workers Compensation

What You Need to Know About Workers' Compensation Insurance

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Workers' compensation benefits provide coverage for medical expenses as well as reimbursement for lost wages when employees are injured on the job. Workers' compensation coverage includes two types of protection: workers' compensation and employer's liability. The workers' compensation portion of the policy pays for claims made by employees, and the employer's liability portion pays the cost of defending lawsuits filed against the company by an employee or an employee's family.

Workers' compensation insurance may not be at the top of your list of things to think about, but it should at least be on that list for three reasons:

Out of Work

Getting covered

Each state enacts its own workers' compensation statutes, so you need to check with your state insurance commissioner's office or your insurance agent to find out about rules that govern your business.

Depending upon where you live, you can buy coverage through a state-run fund or a private insurer; some states offer a choice of either. If your state doesn't offer a state-run insurance fund and you can't qualify for private insurance, you will be insured by an assigned-risk pool.

Cutting workers' compensation costs

Workers' compensation premiums depend upon the nature of your business, the jobs your employees perform and the number of hours they work. Each job type is assigned a classification code. Riskier work is classified as such and assigned a higher premium. Thus, you might pay 48 cents in premiums for every $100 in payroll that goes to a clerk in a retail store. By contrast, a truck driver's premiums might set you back $9 per $100 of payroll. But there are ways to control your costs. Try these strategies:

Stay out of the pool

If you're in an assigned-risk pool due to a poor safety record or unusually high risk, you'll pay high premiums for relatively poor service. Find out why you're in the pool. If the problem is your firm's safety record, you should take steps to improve safety and reduce the chance of accidents in your workplace. Enhancing workplace safety will improve your workers' quality of life as well as your bottom line. Consider some of the following ideas:

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