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Workers Compensation Guide
Most businesses need employees to remain stable enterprises, in fact, few do not. But with having employees comes responsibility towards those same employees. If an accident occurs while an employee is working, even if no one is at fault, there will be medical expenses to pay, and the employee faces a loss of income. Government regulations require that businesses provide employees with a financial safety net.
How big the safety net needs to be depends on the size and type of business. Larger corporations need more insurance than smaller ones, and those engaged in industries that are more dangerous than most also need to provide more insurance for their employees. While it's true that many companies dislike having to pay the premiums, the alternative, in the event of an accident, is far worse. Employees who have accidents would have no other recourse except to file a lawsuit against their employer, if there were no policies in place. Legislation requiring workers compensation policies be in place don't protect just the employees, but also the companies themselves. There are different plans that companies can purchase, and different methods to reduce costs. MerchantHunter.com has information that can save your company money while still providing more than adequate protection for your employees.
The Basics of Workers Compensation
On the Federal level, all companies with one or more employees who are not related to the company's owner must retain a policy specifically for workers compensation that will cover employees medical costs and subsequent loss of income. Death benefits to family members in the event an employee is killed while on the job is another requirement. Individual states have additional requirements, and vary greatly. The benefits paid to the employee will depend on how the injury will affect his or her future performance in their job functions.
Because individual states have additional requirements, employers with employees who work remotely will need to take into consideration which state their employees are employed from. Work at home positions are becoming more common, and to avoid this extra cost, many employers are classifying such workers as sub-contractors instead. Such employees do not need to purchase such insurance for themselves, unless they themselves hire employees.
There are pros and cons to workers compensation insurance, such as the protection it gives to both employers and employees, but there is the cost involved. Premiums are not to be paid by the employees, but by the employer only. Claims are processed by the firm the insurance is purchased through, however if fraud is suspected, it is the employer's responsibility to report this to the agency. Other disadvantages are higher premiums in the event of frequent claims being made, but this is normal with insurance. Another problem faced by companies is that regulations change on a frequent but irregular basis and companies should stay alert to these changes and what they can mean for not only implementing their insurance policies with their employees, but also that rates can change, making another plan more beneficial for the company, without leaving employees with fewer benefits.
The Types of Claims that Can be Made
There are four main types of claims that can be made with workers compensation insurance. The first is Incident Only, which is basic claims, such as a pulled muscle from climbing stairs. There is no serious injury, but the employee might receive a small amount in order to pay for over the counter pain relievers and the like. However, if this type of claim is not made immediately, the company can be forced to pay fines for late filing. It is very important to take every injury seriously, and to make sure that your employees all know that even slight injuries need to be reported, or they will be unable to be covered in the future.
The second type, Medical Only, is for employees who need medical treatment and t hen will be able to return to work soon after. This covers costs that other insurance will not cover. When the doctor states that the employee is able to return to his or her duties, the claim is completed and no more payments will be made. The third type of workers compensation insurance is for Lost Time. There are three sub-categories with this type of insurance claim. There is temporary total disability, permanent total disability, and partial disability. With Temporary Total Disability, the insurance will pay for the time period medical advisors state the person is unable to work. Permanent Total Disability claims are rarely covered, as there is often some sort of work the employee can return to in the future. However, when it is paid, it will cover a great majority, if not all, of the worker's previous salary or earnings. Partial Disability will cover the difference in a person's loss of income when he or she cannot return to work at full capacity, but can return for part-time work.
The fourth type is Death Benefits, which are paid to the worker's family in the event of his or her death. For these types of claims to be paid, there are conditions that need to be met. If there is any fraud, you should immediately inform your insurance provider of your concerns, and an investigation will be conducted. If an employee is under the influence of drugs or alcohol, or has a previous medical condition that contributed to the accident, the claim cannot be covered. Also, workers who engage in unsafe work practices cannot have their injuries covered.
The Different Types of Workers Compensation Policies
Some businesses engaging in higher risk types of industry, as well as all companies in certain states, are required by law to purchase Assigned Risk Funds insurance. State officials manage these funds, and the claims made on them. Self Insurance can be purchased by those companies who are based in other states and aren't engaged in high risk industries. However, vast financial reserves are required to be held by the company, as well as gaining certification from state insurance boards.
Knowing about Rates
Three factors, risk classification of the industry, the state the business's employees work in, and the safety record of the company all play a role in how cheap, or steep, the policy's premiums will be. Generally, costs are less than ten percent of the worker's pay, but these costs can be lowered if a plan with a deductible is chosen. The deductible would need to be paid by the employer, not the employee.
Tips on Buying Workers Compensation Insurance that is Right for Your Company
If you hire workers who have been injured prior to working for you, a Second Injury Fund may be the right choice for those employees. Bankruptcy does happen, and you need to ensure that any company you choose will have in place funds that cover employees and their ongoing payments due in the case the insurance company goes bankrupt. An option that many decide upon is getting more than the minimum coverage. This protects employees in especially hazardous industries. In addition to this, non-traditional injuries such as stress related illnesses, might need to be covered.