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The Five Ws of Workers Compensation Insurance for Small Business Owners

Workers compensation insurance is extremely important, especially if you have workers in your small business. Even if you only have one employee, it’s crucial to take the right steps to ensure your legal compliance when it comes to workers compensation coverage in your state. The following are answers to the most common questions about workers compensation insurance for small business owners.

The Five Ws of Workers Compensation Insurance for Small Business Owners
 The Five Ws of Workers Compensation Insurance for Small Business Owners


What is Workers Compensation?

Workers compensation is an insurance policy that covers employees who are injured on their job. The policy provides benefits to workers or their families if a work-related injury results in death, disability, or medical costs. Workers comp insurance isn’t required by law but is highly recommended—it’s difficult and expensive to open a business without it. If you have workers in your business, talk to your state insurance commissioner about getting policies before opening your doors. This information should be easy to find online—or visit directly at [INSERT YOUR STATE INSURANCE COMMISSIONER'S WEBSITE HERE]. Larger businesses can expect to pay between $500 and $5,000 per year for coverage, while smaller ones will see rates as low as $150 annually.

Read Get insurance for small business: The ins and outs of protecting your company

When Do I Need It?

Regardless of how big or small your business is, having workers compensation insurance for small business owners makes a lot of sense. If your company employs one person, two people, ten people or more, it’s essential that you have some form of coverage in place. Workers comp insurance provides financial protection to workers who are injured on-the-job. This type of coverage is mandatory in all states and many cities, so even if you operate out of your home without employees, you still need to be covered by workers comp insurance. What Are My Options?: When choosing workers compensation insurance for small business owners, there are a few different options available to you: (1) state fund; (2) self-insurance; and (3) private carriers such as The Hartford. State Fund: State funds are typically run by state governments and can vary widely depending on where you live.


Who Are My Options?

A lot of people don’t realize that small business owners have a lot more options when it comes to workers compensation insurance than what you might expect. Talk to your agent about your options and figure out what combination is best suited for your needs. There are even programs in some states, like California, where you can set up your own program and buy workers comp through a risk-sharing plan. Make sure you know all your options!


Where Can I Get the Best Deal?

If you're going to buy workers comp insurance, one of your most important decisions will be choosing an insurance carrier. Get recommendations from friends, colleagues and industry groups. Ask how they'd rate their carriers in terms of customer service, claim handling, quality and cost. Just as a buyer wants to find a good price on workers comp coverage, an insurance company is looking for a high-quality risk. Try to find an insurer that is willing to commit to giving you more than just a low premium on workers compensation coverage; with so many things affecting costs, including payroll and industry type, it's not likely that your rates will stay exactly where they are once your policy goes into effect.


Why Is it Important to Act Fast?

When you need workers compensation insurance for small business owners, it’s crucial to get a policy as soon as possible. You don’t want to lose any profits due to lost time, but you also want your employees and yourself to be safe and secure during recovery. Waiting too long can hurt your business by raising costs and forcing you into an unfavorable situation with insurance companies. The best way to avoid these issues is by taking immediate action; before you know it, your workers will be back at work.

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