Demystifying Workers' Compensation For Small Businesses

Workers’ compensation insurance is one of the most important and misunderstood areas in the small business world.

Regardless of industry, employees are often at risk of experiencing injury or illness while working.

In the event of a workplace injury, many employees who do not have financial help are likely to find themselves with significant debt as a result of mounting medical bills and lost wages.

In addition, businesses may be subjected to personal injury lawsuits from injured employees who are seeking damages, causing financial distress to the business that can be difficult to recover from.

According to Tracey Berg, the president of Cerity, a workers’ compensation insurance provide, both employers and employees benefit from workers' compensation insurance.

Adds Berg, luckily, workers’ compensation insurance offers protection to both the employee and the employer by covering expenses related to on-the-job injuries, including short- and long-term medical bills, lost wages, and legal fees related to workplace personal injury lawsuits.

Why small business owners – all business owners, really – should be concerned with workers’ compensation.

First, there is no doubt some owners might wonder if it’s truly worth the cost. In short, yes, it is, especially when the cost can be less than one might think as with pay-as-you-go workers’ compensation insurance.

Berg believes small business leaders need to think of workers’ compensation insurance as the crucial part of their risk management plan. Small businesses are often the ones that are least likely to be able to handle risk such as that from a work-related injury claim by an employee.  Not only could the business have to pay for medical care, but there is also the risk of fines or even being forced to go out of businesses for not being in compliance. With the appropriate coverage, business owners can avoid such devastating expenses while ensuring compliance with relevant state laws.

What Is a Workers’ Compensation Claim? A workers’ compensation claim is an insurance claim that is filed through a business’s workers’ compensation insurance provider. Its purpose is to help cover the costs related to a workplace injury or illness.

By filing a claim, an employee is alleging that the injury or illness is a direct result of their employment and is holding the business liable for covering the costs related to the injury. As with other types of insurance, businesses have workers’ compensation to help cover those costs. Once a claim is filed, the workers’ comp claims process begins, and the claim is either approved or denied.

What Is the Workers’ Compensation Claims Process Like?Although the workers’ comp claims process can differ depending on the state, for the most part, the process is as follows:

  1. Following a workplace injury, the employee must act quickly to report the injury or illness to their employer.
  2. The employee will then receive the proper workers’ comp paperwork from their employer, fill it out, and submit it back to the employer.
  3. Once the paperwork is submitted, the employer submits the paperwork to their insurer, officially filing the claim.
  4. Once the workers’ comp claim has been received by the insurer, the insurance adjuster assigned to the claim assesses the situation using all available evidence and either approves or denies the claim.
  5. In the event of approval, the insurer will contact the employee with details about payment. The employee can choose to accept the amount offered or pursue legal action if they feel the funds are insufficient.
  6. In the event of a denial, the employee can choose to either accept the determination, ask the insurance company to review its decision, or pursue legal action.
  7. Once a determination and agreement have been made between the employee and the insurance company, the employee must notify their employer as to when they can return to work.

How Long Does the Workers’ Compensation Claims Process Take?Every employee, business, and workplace injury or illness is different. Additionally, every insurance policy and company’s protocols are different. That said, the length of time a worker’s comp claim can take from start to finish varies greatly depending on the unique circumstances of each claim.

For example, a claim in which the employee does not accept the compensation amount offered by the insurer will take significantly more time than instances in which the employee deems the compensation amount sufficient. The claim timeline also depends on the severity of the injury or illness. Complicated injuries and their long-term effects can require more time to determine a compensation amount.

How Much Does Workers’ Comp Insurance Cost? Workers’ compensation insurance premiums are based on multiple factors, such as the industry and state in which a business operates in, the workers’ comp claim history of a business, and other factors that are unique to each business.

However, compared to the costs associated with being held liable for an employee injury, which includes medical expenses, lost wages, and legal fees, many business owners find workers’ compensation insurance premiums worth the investment. And many find that workers’ comp insurance is more affordable than expected once they get an online quote.

Tracey Berg, the president of Cerity, a workers’ compensation insurance provide. Cerity — A New Approach to Workers’ Comp. Cerity is a faster, more affordable, and more flexible way to get workers’ comp insurance.

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