Whether you work for yourself or are an employee of a business, it can be challenging to know what you need in terms of workers comp coverage. As an employee, how do you know if you need it and how much? In addition, many small business owners opt out of offering workers comp coverage for their company because of the cost. However, this leaves them vulnerable if they are injured on the job and cannot work. Fortunately, there are other options available to small business owners. Instead of opting out of workers comp entirely, you can choose to become an independent contractor or a sole proprietor instead of an employee. Depending on your circumstances and business operations, this could give you access to different kinds of affordable insurance tailored specifically for your needs as a small business owner. Read on to learn about workers comp coverage for employees and business owners.
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What is workers comp coverage?
Workers comp coverage, or insurance, is an insurance policy that is meant to protect employees and their employers. Most employers are required by law to have it for their employees, and the coverage is paid for by the employer. Employees are also covered by the policy if they are injured on the job. Workers comp coverage provides medical coverage and a portion of lost wages for employees who are injured. It also provides disability coverage if a worker is unable to do their job due to an injury.
How does workers comp coverage work for employees?
If you are an employee, your workers comp coverage will likely pay for your medical expenses and any lost wages if you are injured at work. This is regardless of whether or not the injury was your fault. If you are prescribed time off from work due to your injury, workers comp will also provide you with partial disability coverage for your lost wages. The amount of your compensation will depend on how long you are out of work.
Should small business owners have workers comp coverage?
As an employee, you are required to have workers comp coverage. If you are an employer, you are required to have it for your employees. If you do not have it, you could face steep fines and penalties. In addition, you will not be allowed to hire employees until you obtain workers comp coverage. For this reason, small business owners are often advised to obtain coverage as soon as they start hiring employees. However, not all coverage is the same. If you are a small business owner, your coverage will likely be very different from coverage for a full-time employee. Whereas workers comp for employees is designed to protect against major accidents and injuries, coverage for small business owners might be more targeted toward smaller, day-to-day accidents.
When you’re a sole proprietor or independent contractor
If you are a sole proprietor or an independent contractor, you will likely have to purchase your own coverage. Depending on your line of work, you may need to buy hazard insurance as well, which protects you from claims due to injuries from specific hazards. Hazard insurance is often required if you work in certain industries, such as construction or excavation. If you work in one of these industries, you may also need extra coverage, called an All Risk Policy, which protects you from any injury related to your work, regardless of cause.
Small Business Owner-Only Insurance
If you only employ yourself and you do not plan on hiring employees, you may be able to obtain coverage specifically designed for small business owners. This alternative to standard comp may cover smaller injuries, such as sprains, strains, and minor cuts and burns. This type of coverage is often cheaper than standard comp for employees, making it a more affordable option for small business owners who are not required to have coverage for themselves.
If you are a small business owner, you may be tempted to forgo coverage because it is expensive. However, this could be a costly mistake. Small business owners who are not covered by workers comp are much more likely to face serious injuries that will sideline them from work for extended periods. If you do not have coverage, you could end up losing money in the long run. You might have to pay for your own medical bills and lost wages when you are injured at work. You could also lose customers if you are unable to meet their needs because of your injury. In short, coverage is essential for any small business owner who employs employees. However, there are options available if you want to get coverage as a small business owner but are unable to get traditional workers comp.
Marlowe Law Can Help
If you have any further questions about workers comp coverage, please reach out to us today. We look forward to doing everything we can to help you get the compensation and service you deserve.