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5 tips for choosing the best workers' compensation policy

  Thursday, June 04, 2015

Work-related fatalities, injuries or illnesses can be devastating for small businesses. Not only are they bad for morale and productivity, they can also be costly in terms of out-of-pocket expenses and potentially higher insurance premiums.

Creating a culture that prioritizes workplace safety is an important way for businesses to mitigate these risks. It is equally important to ensure your business is adequately covered with workers’ compensation insurance.

Finding the right insurance can seem like a daunting task, especially for new business owners.

1. Find a good agent or broker

A good insurance agent or broker is invaluable. He or she can educate you on the best policies to protect your business. Look for a partner who is both an expert agent and knowledgeable in your industry. Your agent should understand workers’ compensation requirements in the jurisdiction(s) applicable to your business. Your agent should also be able to counsel you in ways to implement safety controls that can help lower your insurance premiums.

2. Know your state requirements

Workers’ compensation requirements vary from state to state. Whether your employees work in multiple states or you are considering opening a location in another jurisdiction, you will want to ensure your agent is well versed in the laws that apply to your business in each locale. Each state mandates the workers’ compensation coverage, if any, that an employer must purchase and what benefits are available to injured workers.

3. Create a safety plan

As Ben Franklin famously said, “An ounce of prevention is worth a pound of cure.” If you don’t have one already, implement a safety plan and establish firm policies to mitigate the risk of work-related injuries. Simple steps like ladder safety, proper signage, appropriate protective gear and regular training can go a long way to reduce claims. Some states offer premium discounts or credits for workplace safety programs. Consult your agent to see if discounts or credits are available in your state.

4. Understand what workers’ compensation insurance covers

These insurance policies are generally divided into two parts. Workers’ compensation covers bodily injury by accident while in the course and scope of employment. It also covers bodily injury by disease caused or aggravated by the conditions of the employment. Benefits, including medical treatment and disability, are generally paid without regard to who is at fault for an accident or injury. However, workers’ compensation benefits will generally not apply where injury results from employee criminal activity, illicit drug use, self-inflicted wounds or suicide.

Employers liability protects employers from civil liability for common law injury claims arising out of and in the course of employment. Such claims may include care and loss of services, consequential bodily injury to an employee’s family member, and other types of third-party claims.

5. Review your policy regularly

Most insurance policies should be reviewed annually. It is important to review your policy with your agent and address any changes in your business operations that may affect coverage or premium. This could include changes in the type of work being undertaken, the states in which your employees conduct their duties, use of independent contractors, and your total payroll or other remuneration paid for work. Depending on the changes, you may even be able to save money on your policy. Be sure to discuss all changes to your business operations with your insurance agent or insurer.