Workers Compensation Insurance is Probably Required of Your Small Business

A Home Business Article Contributed by Elizabeth Fox-Wise

If Your Small Business Has Employees, You Probably Need Workers Compensation Insurance

Workers Compensation Insurance will protect the employees of your small business if they get injured on the job. Fault does not matter with workers compensation insurance. As long as your employee was injured while in your business or while conduction business for you, they are covered by worker's compensation insurance. This is true even if the employee was at full or partial fault for the injury.

Every state in the United States, with the exception of Texas, requires that businesses that hire employees carry workers compensation insurance. The requirements of the workers compensation insurance varies from state to state. Many states do not require the small business to carry workers compensation insurance unless he employs more than a certain amount of employees, typically three or five. Be sure to investigate the workers compensation laws in your state to make sure that your small business is not in violation.

Workers Compensation Insurance Protects Your Small Business Employees in the Following Ways

Workers compensation insurance covers your employees in the event of injuries or loss of limbs, diseases caused by the nature of the job such as repetitive motion, injury which occurs at work, and death. In the event that at employee has a workers compensation claim under one of these categories, the insurance will cover any medical treatment and rehabilitation required so the employee can return to work. And during the time that the employee is unable to work it will compensate him or her for lost wages, usually up to 2/3 of their salary.

Some States will give the business owner the option of either providing workers compensation insurance through an insurance agency or self-insuring his own employees. If your state does allow the business to self insure, this means that in the event of a situation where one of your employees would qualify for workers compensation, then your small business must pay for the medical, rehabilitation and lost wages of the eligible employee.

How Costly is Workers Compensation Insurance for Your Small Business?

If the laws in your state require your small business to carry workers compensation, and you are not choosing to self insure your employees, then you will have to seek a workers compensation insurance plan.

What you will pay for workers compensation insurance will depend on the type of small business that you own. There are approximately 700 occupational classification codes used by insurance companies to determine the cost of workers compensation insurance. The higher the risk level of the job, the higher the premium for workers compensation insurance.

The workers compensation premium is calculated based on each $100 of pay. Say for example a file clerk who's job is low risk, his workers compensation might cost his job 30 cents for each $100 he earns in pay. Rates will graduate along with the risk level of the job, all the way up to truck drivers who are considered one of the highest risk employees and for them you may pay as much as $10 for every $100 of salary.