As an employer, your overall business insurance policy should have a minimum of two components: employer’s liability and workers’ compensation. Business owners commonly make the mistake of thinking only one of these elements will provide sufficient coverage, but that is not the case. While workers’ compensation insurance safeguards you when a no-fault, on-the-job injury happens, employer’s liability insurance will keep you protected against negligence claims filed by injured employees.
When General Liability Coverage Isn’t Enough
In many states including California, employers are legally required to have workers’ compensation insurance, even if they only have one employee. Workers’ compensation (also called “workman’s compensation” many years ago) was designed to protect both employers and staff by providing effective medical treatment for on-the-job injuries while striving to prevent business owners from being sued over those incidents. In addition to medical care, workers’ compensation benefits include temporary and permanent disability benefits as well as supplemental job displacement, vocational rehabilitation and death benefits. Sometimes, if an employee feels that workers’ compensation doesn’t adequately cover his or her injury or that the injury was due to negligence, an employee may sue for additional amounts; this is where employer’s liability coverage comes in to further protect your company.
Controlling Workers’ Compensation Costs
In the long run, you cannot afford to go without workers’ compensation insurance; however, recognizing how your premium is calculated is crucial to controlling workers’ compensation costs. The National Council on Compensation Insurance (NCCI) collects statistics on an ongoing basis, then uses those statistics to determine whether an employer is considered a high or low hazard within their industry. Low-hazard companies tend to pay less in premiums because they submit fewer claims, and employers with good safety records pay lower rates as well. Additionally, premiums are calculated based on the experience modification (mod) factor, which depends on payroll and policy loss data. Mod reduction and management are vital to keeping workers’ compensation costs low.
At Insurance Solutions, understanding the nuances of workers’ compensation is one of our many responsibilities. If you are already a client, sign in to the client portal to explore our body of educational resources. If you aren’t yet a client, give us a call at 800-969-8082 to learn more about how Insurance Solutions can help you.