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Do Small Business Owners Need Workers Compensation?

Small Business Workers Comp Header Image

Maintaining a safe, hazard-free workplace is the key to helping keep your employees healthy and your business running smoothly. But accidents happen, and when they do, it's essential to have workers' compensation insurance in place.

Can small business owners benefit from having workers' compensation if they only have a few employees or believe their workplace is safe? The answer is yes. In fact, most states mandate that even small businesses maintain some type of workers' compensation coverage.

No matter the size of your business, it's important to understand your responsibilities for maintaining workers' compensation insurance.

What Is Workers' Compensation Insurance?

Workers' compensation is a type of insurance that can provide financial benefits to workers who are injured on the job. As the employer, you pay for workers' compensation coverage, and your insurer will pay out benefits if an employee files a compensable claim.

So why do business owners need workers' compensation coverage? This type of insurance helps offer some financial protection to you and your employees. If one of your workers suffers a compensable work related injury they can receive wage loss and medical benefits until they can return to work.

Purchasing workers' compensation insurance is a safe way to stay on the right side of state guidelines for providing such coverage. Navigating workers' compensation laws can be tricky at times, but a knowledgeable insurance carrier can help provide you the coverage that your particular state requires.

Workers' Compensation Laws

When do small business owners need workers' compensation? This is a commonly asked question, and the simple answer is that if you have employees, you typically need workers' compensation insurance.

The requirements for workers' comp insurance vary by state and generally govern:

  • When coverage is required, based on the number of employees
  • Which business owners, if any, are exempt from purchasing coverage
  • What options do business owners have for purchasing workers' comp insurance (i.e., commercial carriers vs. state funds)
  • Fines and penalties for failure to maintain appropriate coverage

In Arizona, for example, workers' compensation insurance is mandatory for all businesses that have at least one employee. Exceptions are only allowed for working partners, independent contractors, casual servants, domestic workers employed in your home and sole proprietors who have no employees. Businesses can purchase coverage through a commercial provider.

Ohio also mandates workers' compensation for all businesses with one or more employee. But business owners are limited to purchasing coverage through a state-administered fund.

Failure to carry appropriate workers' compensation insurance coverage could result in fines or other penalties. Even when not required by law, a workers' compensation policy helps provide businesses with important additional financial protections.

What Does Workers' Compensation Cover?

Worker's compensation insurance generally covers work-related injuries and illnesses that are within the course and scope of an employee's employment and occupational diseases. For example, if someone is injured by a piece of machinery or gets sick after coming into contact with dangerous chemicals while at work, those could be covered under a workers' compensation policy.

Do business owners need workers' compensation for every injury or illness? Not necessarily. Some things may not be covered by workers' compensation insurance, including:

  • Self-inflicted injuries
  • Injuries that occur while the employee is intoxicated or under the influence
  • Injuries that occur during the commission of a crime
  • Illness or injury that results from a violation of employer policies
Workers' compensation insurance benefits typically fall into one of four categories of costs. They include medical expenses relating to a covered injury or illness, lost wages, rehabilitative costs if physical therapy or ongoing care is needed and funeral expenses in a worst-case scenario.

Workers' compensation generally pays out benefits until the employee can return to work. State laws can establish minimum and maximum weekly benefit amounts and maximum terms for how long benefits can be paid. State law can also dictate how long an employee has to file a claim following an on-the-job injury or illness.

How to Get Workers' Compensation Insurance

If you're starting a new business or operating an established business and don't have workers' compensation coverage yet, getting coverage as soon as possible can help protect your business. Checking your state's requirements for coverage is an excellent place to start. Doing so can help you determine whether you can purchase workers' compensation insurance from any insurer or whether you'll need to use your state-approved fund.

Westfield offers coverage to help you protect your small business. Westfield's workers' compensation policies also help cover your employees' lost wages and provide reasonable, related, and necessary medical treatment should a covered injury occur. Benefits include the WesCare® 24/7 Nurse Triage Program, the Pharmacy Benefits Program, claims services like medical bill review, and the WesWorks® Return-to-Work Program, which helps your employees get back to work as quickly as possible.

If you're ready to explore your options for workers' compensation insurance, connect with an independent Westfield agent today.

The information contained herein is provided solely as a general overview of products and services offered by Westfield and does not replace the terms and conditions of your actual policy language. This information is not to be considered a firm offer to sell insurance and does not constitute a binding contract. All applications for insurance are subject to normal underwriting standards and guidelines applicable to a risk. For more information on coverages and limits, please contact your Westfield agent. Westfield reserves the right to change any of the terms and conditions or the availability of products and services. Products and services may not be available in all states.