Workers compensation (WC) feels like a no-brainer. Your state requires it. You have to have it — so you do. The end.
But there’s a little more you should know about WC — especially if one of your employees is among the millions who suffer workplace injuries and illnesses every year. Even if your industry isn’t inherently dangerous—no heavy machinery or working from heights—repetitive motion injuries, overexertion, stumbles, and even workplace violence can result in a WC claim. When an accident happens, make sure you understand how to make a claim, how to best support your injured workers, and how to make sure transitions back to work are safe and positive for all involved.
What workers compensation is.
In a word, workers comp is insurance. If you own a home, you need insurance. If you drive a car, you need insurance. And if you have employees, you also need insurance. Just as homeowner’s or auto insurance covers loss or damage associated with your residence or vehicle, workers comp covers the costs related to any injuries or illnesses your employees may sustain while at work. Covered costs generally include:
- The treatment of physical injury or disease, including vocational rehabilitation or physical therapy, resulting from on-the-job activities
- Payment of a portion of wages during recovery, or longer if the employee suffers a total or partial disability
- Burial, in the event of an employee’s death, as well as payments to a spouse or other dependents
- Work-related mental/psychiatric conditions — depending on the state
What workers compensation isn’t.
Workers comp isn’t meant to take the place of other health insurance, life insurance, or disability coverage—it only covers on-the-job injuries, not other medical or disability issues. Nor does WC cover property or equipment, though both might be damaged in an accident that also injures an employee. There are also some variations in what WC covers and requires from state to state.
The differences among states.
Because WC is handled at the state level, there are some differences to be aware of. Most states, for example, allow and/or require employers to buy private insurance to meet their WC obligations—but a handful of states and U.S. territories require that you purchase coverage directly through the government. It’s important to understand how your state’s regulations might play out in your business. For example, you might find yourself responsible for a WC claim filed by a subcontractor you hired for a specific job—even though you, as a sole proprietor, do not have employees. Visit your state’s workers compensation website or Liberty Mutual Insurance’s WC policyholder toolkit to learn more.
Returning to work.
In 2013, 60 million working days were lost in the United States to on-the-job injuries. While WC covers a percentage of injured employees’ lost wages, short-handed businesses often find themselves with production bottlenecks, drops in customer satisfaction, and other significant indirect costs. The best way to combat these costs—and ensure a safe and positive workplace for all workers—is through a comprehensive return to work (RTW) program. These initiatives vary depending on the nature of the injury and recovery, but they should always involve regular communication, engagement, and support from the employer. Other elements of an RTW program might include accommodations and modifications to environments or processes, or a gradual transition with fewer physical demands on the returning worker.
Cost vs. value.
Your WC insurance premiums will be determined first and foremost by the size of your payroll: the smaller your workforce, the lower your premiums will be. But your industry, the types of roles your employees fill, your location, and any existing claims history can also impact the cost of WC coverage.
Since most states require WC coverage, your foremost consideration should be the entire value your policy and insurance provider bring to your business, not simply the cost. For example, providers that have strong RTW programs and deep WC experience in your state and industry could save your business money over time, regardless of the initial premium.
When to make a claim.
While there’s some variation from state to state, a worker generally has 30 days to inform his or her supervisor of a work-related injury, and between one and two years to file a workers comp claim with the state. If a worker sustains an injury gradually over time, he or she should take the necessary steps as soon as it becomes apparent that the condition is becoming disabling.
In some states, employees injured at work aren’t required to formally report injuries in writing, as long as supervisors are aware. However, supervisors must complete a report as soon as they become aware, and any claim based on these injuries must still be made within the state’s established time frame. Because there are so many variations from state to state, make sure your insurance agent is aware of all state regulations and is experienced at handling WC claims.
Whether you’re new to the WC market, need to upgrade your coverage as you grow, or are simply looking at ways to manage risk and assuage employee concerns, there are a great many resources available to help you. The U.S. Department of Labor’s Office of Workers Compensation Programs provides compliance assistance, answers to FAQs, and more.
Your independent insurance agent is another valuable resource. Most experienced agents know which providers specialize in WC or in a given industry, and can connect you with an insurer that meets your needs. Finally, your insurer can offer programs and resources to help you avoid accidents, manage claims, and help workers get back on their feet—like Liberty Mutual’s workers compensation coverage. These and other offerings can turn an insurance policy into an investment in safety, employee relations, and the future of your business.
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