Have you ever wondered what would happen if one of your employees got injured on the job? As a business owner, I used to think that business insurance would cover any eventuality, but a personal experience taught me otherwise. Let’s dive into the details of business insurance and employee injuries, so you can make sure you’re adequately protected.
Understanding Business Insurance Basics
First, it’s important to understand that not all business insurance policies are created equal. There are different types of coverage, and each one serves a unique purpose. The two main types of insurance that might come into play when an employee is injured are:
- General Liability Insurance: This covers third-party claims, like when a customer slips and falls in your store. It won’t cover employee injuries.
- Workers’ Compensation Insurance: This is designed to cover work-related injuries and illnesses for employees.
When I first started my business, I only had general liability insurance. I thought it was enough, but then an employee slipped in the kitchen and broke their arm. That’s when I realized I needed workers’ comp.
General Liability vs. Workers’ Compensation: What’s the Difference?
General Liability Insurance: Not for Employee Injuries
General liability insurance is must-have for any business, as it covers things like property damage, bodily injury to third parties, and advertising injuries. However, it doesn’t cover injuries to your employees. Here’s why:
- It’s designed for third-party claims, meaning claims from people who aren’t employed by your business.
- If an employee gets injured on the job, their claim would be considered a first-party claim, which isn’t covered by general liability insurance.
Workers’ Compensation Insurance: Designed for Employee Injuries
Workers’ compensation insurance, but, is specifically designed to cover work-related injuries and illnesses. Here’s what it typically covers:
- Medical expenses
- Lost wages
- Rehabilitation costs
- Death benefits (in case of a fatal work-related accident)
After my employee’s accident, I quickly learned that workers’ comp is a vital part of running a business. It’s there to protect both you and your employees.
When Should You Get Workers’ Compensation Insurance?
Here’s the thing: in most states, if you’ve employees, you’re required by law to carry workers’ compensation insurance. But even if you’re not legally required to have it, it’s still a good idea.
Approach 1: Wait Until It’s Required
Some business owners take the approach of waiting until they’re legally required to get workers’ comp insurance. This is often when you reach a certain number of employees, which varies by state. For example, in California, you need workers’ comp if you’ve even one employee, while in Texas, it’s optional for most employers.
- Best for: Small business owners who want to save on costs initially.
- Risks: If an employee gets injured before you’re required to have insurance, you’ll be responsible for their medical bills and lost wages. This could be financially devastating for your business.
Approach 2: Get It Early
Other business owners, like me, prefer to get workers’ comp insurance early, even if they’re not required to have it. This way, they’re protected from the start.
- Best for: Business owners who want to protect themselves and their employees from the beginning.
- Risks: The main downside is the cost. Workers’ comp insurance can be expensive, especially for small businesses.
In my experience, the peace of mind that comes with having workers’ comp insurance from the start is worth the cost. Plus, it shows your employees that you care about their well-being.
What If an Employee Gets Injured and You Don’t Have Workers’ Comp?
Let’s say you’ve chosen to wait until workers’ comp is required, and an employee gets injured before you’ve the coverage. What happens then?
First, you’re responsible for covering their medical expenses and lost wages. This can be a significant financial burden, especially for small businesses. In some cases, it could even lead to bankruptcy.
And, you could face legal consequences. In some states, not having workers’ comp when required can result in fines, penalties, or even jail time. Plus, if the employee decides to sue, you could end up paying even more in legal fees and damages.
After my employee’s accident, I realized that the cost of not having workers’ comp far outweighed the cost of the insurance itself. It was a hard lesson, but one that I’m glad I learned early on.
How to Choose the Right Workers’ Comp Insurance
Not all workers’ comp insurance policies are the same. Here are some things to consider when choosing the right one for your business:
Type of Business
The type of business you run can impact your workers’ comp premiums. For example, a construction business will likely pay more than a retail store because the risk of injury is higher. Make sure to choose a policy that’s tailored to your industry.
Number of Employees
The more employees you’ve, the higher your premiums will be. This is because there’s a greater chance of an injury occurring. Some insurers offer discounts for businesses with a certain number of employees, so be sure to ask about these when getting quotes.
Coverage Limits
Workers’ comp policies have coverage limits, which is the maximum amount the insurer will pay out for a claim. Make sure to choose limits that are high enough to cover potential injuries, but not so high that they’re unaffordable.
Deductibles
Some workers’ comp policies come with deductibles, which is the amount you pay out of pocket before the insurer covers the rest. Choosing a higher deductible can lower your premiums, but it also means you’ll pay more if an employee gets injured.
After my employee’s accident, I took the time to review my workers’ comp policy and make sure it was the right fit for my business. It’s an important part of running a business, and it’s worth taking the time to get it right.
Final Thoughts
As a business owner, it’s easy to get caught up in the day-to-day operations and forget about the what-ifs. But the truth is, accidents happen, and it’s better to be prepared. I learned this the hard way, but I’m glad I did. Now, I can rest easy knowing that my employees are protected, and my business is too.
So, if you’re like me and were skeptical about business insurance covering employee injuries, I hope this article has helped change your mind. Don’t wait until it’s too late – get workers’ comp insurance and protect your business and your employees today.
