Understanding Workers’ Compensation Policies
Workers’ compensation policies are an important topic for business owners, human resources departments, and management professionals. Almost every state requires workers’ compensation insuranceand without it, you could lose business, valuable time, and money. There are plenty of third parties and businesses that will refuse to work with you if you do not have the proper coverage.
Why Workers’ Comp?
Workers’ compensation creates a safer, more productive workplace and can save your business money. When an employee is injured at work, their medical care and physical rehabilitation are covered to reduce lost wages for the time they are unable to work. It also protects you from being sued by an injured employee. Without sufficient coverage or any coverage at all, you create a great financial risk for your business.
Workers’ compensation insurance also gives your employees greater peace of mind. It instills confidence in your workers and makes them feel more secure knowing they will be covered in their workplace. Workers’ compensation is crucial for all small, medium, or large businesses, especially in certain industries. For instance, the manufacturing industry is exposed to a more hands-on work environment where injuries are more frequent. These companies will benefit greatly from workers’ compensation policies if an accident were to occur. Regardless of your industry, your business needscoverage because the penalties for lacking a policy are an expense you should not have to budget for.
In California, you are required to purchase workers’ compensation insurance and cannot ask for your employees to help pay for your policy. The Department of Industrial Relations provides more information on workers’ compensation for employers.
Common Policy Mistakes
Claim Management. Inability to effectively manage claims in a timely and accurate manner can easily increase your costs. It is crucial to investigate the cause of any accidents or injuries and monitor the status of any open claims. Communication with your injured employee and insurance adjustor is key during this time. You want the employee to return to work as soon as possible, but also want to be active in managing the claim to reduce costs.
Payroll Estimations. Because the cost of your policy, in part, is based on your business’s payroll, your estimations can affect your policy cost. If you estimate the payroll lower than it actually was, then you will have additional costs to pay. If you estimate higher, then you will receive a refund. Though a refund sounds beneficial, your business missed out on using these funds during the time you could have used to cover other costs or invest.
Proof of Insurance. Obtain proof of workers’ compensation insurance when working with third parties, such as independent contractors. It is crucial to work with individuals and companies who are properly insured. You are responsible for making sure they have proper coverage, or you could cost your business more money in the long run.
Policy Shopping Tips
Policy quotes will vary by location and insurance carrier. Shop around for quotes to compare the best prices for your business. You can work with an insurance broker who will offer you competitive quotes from various carriers. This helps you save more time in researching quotes and searching for reasonable prices. We also recommend asking or searching for quotes every couple of years to ensure you are always paying the best price.
Want to learn more about Workers’ Compensation policies, how to avoid common auditing nightmares, claims intake, and more? Attend Coast General’s business seminar on Friday, March 23rdfor a presentation at 8:15 – 9:30AM. Please RSVP by March 19thvia info@coastgeneralinsurance.com. More details can be located on our Facebook page. We hope to see you there!