When do I need to have coverage?
Your business needs to purchase a workers’ comp policy if you are ready to hire your first employee, have one or more full-time employees, or has one or more part-time employees. Some exemptions exist, but not purchasing coverage is a huge risk. Workers’ compensation policies protect your employees, but also your business. If you are covered, and employee who receives benefits can’t sue you for their injuries or lost wages. And if they sue you for things not covered under workers’ comp, employer’s liability insurance is typically included to pay for court costs and legal fees.
How does workers’ compensation insurance work?
Each state has its own laws employers must follow. However, in general, an employee can only receive benefits if their injury or illness is a result of their employment. If an employee receives their illness or injury outside the scope of their employment, workers’ comp doesn’t provide coverage.
There is no universal limit to the amount a policy pays an injured employee. Each state determines the limit and it is usually determined by the employee’s salary and severity of their injury or illness. There is, however, a liability coverage limit. Basic limits required by law range from $100,000 per employee for bodily injury to $500,000. Depending on the size of your business, it may be a smart move to purchase increased liability coverage.