Knowing what you need, before you need it: Workers Compensation
Writing an industry plan, selecting a business location, funding your business, obtaining a tax identification number, business licenses and permits seems like a long list and a lot of work. Even after all those necessities are accomplished, there is still one very imperative component missing—Workers’ Compensation insurance. Not simply is Workers’ Compensation insurance required in most states, it’s also significant to help protect both you and your employees from unforeseen.
After some all-encompassing research on Workers’ Compensation, we staggered upon an article that answers most of the “what,” “why,” “when,” even the “how much” questions. If you have a small business or plan to start your own business, check out the information below from the National Federation of Independent Business to help:
What is Workers’ Compensation?
Workers’ Compensation is a form of insurance that covers the medical and recuperation costs of your employees if they’re injured on the job typically. (It also may cover some lost wages.) Characteristically, having insurance that covers these costs means employees give up their right to sue your business for casualness—and in turn, they get peace of mind knowing they can recover for work-related injuries without the complication of a lawsuit.
Not only is Workers’ Compensation insurance mandatory in most states, but it’s also imperative to help protect both you and your employees from the unexpected.
Why does my small business need it?
Your small business ought to carry Workers’ Compensation insurance since most states require it. Even if your state doesn’t require it, your customers might not do business with you unless you carry it. State-levied consequences for not carrying Workers’ Compensation can be stiff.
Precise requirements also vary from state-to-state. For example, farming employees and self-employed persons are exempt in some states. And recall, states do not provide the insurance—insurance must be acquired from companies like Insurance Professionals of Arizona!
When should I purchase workers’ compensation?
In most states, Workers’ Compensation insurance is required as soon as you have one or more employees who aren’t the business owner or partner.
Is it expensive?
Cost is determined by the Workers’ Compensation Board in your state, but most states use a similar formula to calculate rates: classification risk, multiplied by 1% per $100 of an employee’s payroll.
Here’s what that means: Each profession is assigned a “risk classification” determined by two factors: regularity of injury at work and brutality of the injury. Then the classification is assigned a dollar amount based on the risk. For example, clerical workers in certain states have a classification of $1.25—a lower risk. If an office manager makes $600 per week, the Workers’ Compensation premium for that employee would be $7.50. Your premiums, however, can be increased or decreased based on your business’ safety history, whether you offer health insurance and other factors.
If you’re in the market for a Business Owners Policy or Workers’ Compensation insurance policy, check out what Insurance Professionals of Arizona can do for you! Call us at 480-981-6338.