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Workers’ Compensation Myths

Workers’ Compensation Myths text overlaying image of a street sign with myth and fact on it You buy workers’ compensation insurance to cover employees in the event of a work-related illness or injury. But not every business owner knows the risks to their business if they opt out of coverage. Or the risk of not having enough coverage to meet your company’s specific needs.  Most states have a law that requires workers’ compensation insurance after you have a certain number of employees so not having coverage could be illegal. Leaving your business vulnerable to large claims and possible lawsuits that could leave it bankrupt is the last thing you want to do. Below we’ve made a list of the most common myths about workers’ compensation.  And what the facts are so you don’t get misled and make a decision based on some bad advice.

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Myth 1: Small Low Risk Businesses Don’t Need Workers’ Compensation

In most states, workers’ compensation insurance is required by law, and many require it as soon as you hire your first employee. It’s important to understand your state’s requirements to avoid compliance issues. Businesses that choose not to carry workers’ compensation insurance despite being required to may be subject to severe penalties and fines. Additionally, injuries can occur even in low-risk industries, so you should be covered no matter how safe your job is. Not to mention, the costs associated with work-related injuries, including medical expenses and lost wages, can build up quickly especially if you don’t have proper coverage. Having a proper workers’ compensation insurance policy in place will protect your business from all angles.

Myth 2: I Only Have A Couple Employees, I Can Pay Out Of Pocket For An Accident

Most states do allow you to self-fund workers’ compensation claims, however it’s not easy to do it. A self-insured workers’ compensation plan is one where you, the employer, assume the financial risk for providing workers’ compensation benefits to your employees. Instead of paying a set monthly premium to an insurance company or state-sponsored workers’ compensation fund, self-insured businesses pay the cost of each claim out-of-pocket as they happen. Since a self insured company assumes this financial risk, it must have the financial resources to meet the obligation.

 

So for smaller businesses this might not be a viable option. There are even some states who won’t even allow companies to self-insure. And even if your state does allow it you have to apply for the permission to self-insure. Which includes state-specific requirements for example you could have to prove you have a networth of at least $500,000 among other things. Essentially you have to prove you can foot the bill for any and all workers’ compensation costs for every employee that you have.

Myth 3: I Don’t Have Employees, I Use Subcontractors So I Don’t Need Coverage

When you bid on a job your possible client may request proof of workers’ compensation insurance for yourself and any subcontractors who will be working with you. For instance, if you are an electrician and bid on a wiring job for a school, the school will need to know that you and your team all have coverage before they’ll even consider your bid. If you don’t have coverage and you or a crew member are injured on the job, your health insurance can deny coverage because it’s a work related injury. Many health insurance policies will not cover these types of injuries.

 

At most you can buy yourself a workers’ compensation policy and require any subcontractors you hire to have their own valid policy. Before your team begins working make sure that they have a valid certificate of insurance. If they don’t, and they get injured, you may be held responsible for any injuries which is a huge financial risk.

Myth 4: Seasonal Businesses Don’t Need Coverage

You need the insurance while your business is operating. The majority of insurance companies will write you a seasonal business policy, so long as you clearly define your open and closed period. For example if you have a pool cleaning/maintenance business and only operate between April and October, your insurance company will activate your service in April and pause it in October. That way you are covered while you’re open and don’t have to pay premiums when you’re closed.

Myth 5: I Only Employ My Family Members, I Don’t Need To Cover Them.

In most cases, a family member who works for you is still considered an employee. Like any other employees that are required to be covered. Damages for on-the-job injuries can cost hundreds of thousands of dollars, without a proper policy you risk footing all of that and then some. You leave your business open to punitive damages, as well as lawsuits along with all those medical bills. Just because they’re family does not guarantee they won’t sue you.

Myth 6: My Employees Work From Home They Don’t Need Coverage

You may believe that workers’ compensation does not apply to home-based employees because you cannot control their working conditions. However, that is wrong. You are still obligated to provide a safe workplace for employees. Even if they work from home or a remote location just as you would for an employee who works on site. All employees are entitled to workers’ compensation benefits. Although home-based employees might have a harder time proving that their injuries are work related.

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Myth 7: If My Employee Doesn’t File A Claim The Day Of The Injury They Can’t File It Later

There are numerous reasons why an employee may delay filing for workers’ compensation. For example, if your employee slips and falls while moving boxes. The employee might get up and feel a little sore but otherwise fine. But over the next week or so their back becomes increasingly stiff and painful. They go to the doctor and the doctor informs them that they actually have an injury, and it was most likely due to their fall and continuing to move boxes has only made the injury worse. Even though your employee did not immediately report the fall, they are still eligible to file for workers’ compensation. Every state has a statute of limitations for how long your employee has to file a claim. So just because they didn’t file that day doesn’t mean they can’t still claim.

Myth 8: Worker’s Compensation Stops Employees From Suing

This is only half true. Yes, if the employee receives workers’ compensation they cannot sue you for the injury itself. However, there are certain circumstances where they can still file a suit against you. For example if the injury was caused by faulty machinery that didn’t have proper maintenance or safety precautions. The employee could sue you for negligence for not properly maintaining the equipment. Or if you manufacture the piece of equipment that injured your employee they can sue you for product liability. 

Myth 9: If The Accident Is The Employee’s Fault They Can’t File A Claim

This is another common misconception about workers’ compensation insurance, but it’s mostly untrue. The misunderstanding likely comes from you confusing workers’ compensation claims with a personal injury lawsuit. It is true that in order to file a personal injury lawsuit, the employee’s injuries had to have been the company’s fault. But that isn’t the case with workers’ compensation. Workers’ compensation is mostly no-fault. Meaning if your employee has a work related injury or illness, they are eligible to file a claim. Regardless of who was at fault. It makes no difference if you believe they should have been paying more attention or could have avoided the accident. The only exceptions to the workers’ compensation no fault rule is if your employee was under the influence of drugs and alcohol at the time of their injury. Or if they intentionally hurt themselves to attempt workers’ compensation fraud.

Myth 10: I Don’t Need An Insurance Agent To Get The Best Policy

This is a difficult myth; a do-it-yourself approach could lead to costly errors. Despite the fact that there are several online tools and carriers that can help you buy a policy. But they can’t help with everything the way an agent can. For example, if you fill your application out and select the wrong classification code for your employees. You will end up owing a massive fine at the end of the year audit. Or your insurance provider could deny you coverage due to the misclassification or other error. We highly recommend consulting with a licensed agent who specializes in workers’ compensation insurance. They will recommend the appropriate coverage and guide you through the process step by step.

 

Here at EZ, we connect you with your own personal insurance specialist who can quickly compare plans available in your area all while staying within your budget. And they do it all for free! That’s right none of our services cost you anything. Our only goal is to make sure you get the best workers’ compensation coverage, and any other business insurance coverage for that matter. To get started, enter your zip code in the box below or call 977-670-3538 to speak with an agent today.

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How Workers Comp Settlements Work

Unfortunately, workplace accidents and injuries happen. When they do, it can be very costly for a business. If one of your employees is injured on the job, they can claim workers compensation benefits to help pay for their medical expenses, lost wages, and disability benefits. These benefits will be provided by the employer’s (your) insurance company.  But, in some cases, an employee may not be happy with the amount offered by your insurance company. Be aware that your employee does not have to accept the insurance company’s offer for their workers comp claim. This is when a workers comp settlement is required.

How Workers’ Compensation Claims Work

two hands holding a magnifying glass in each hand
When a worker gets hurt, you must first get them medical help and then investigate exactly what happened for your claim.

If your employee is injured at work, they have to report it to you, the employer. If this happens, you need to take the following steps:

  • Get your employee medical attention right away
  • Investigate the accident by documenting what happened and by taking witness statements and pictures, if possible
  • File a claim with your insurance provider

Each state has different timelines for filing a claim, but, in most cases, the claim must be reported within anywhere from 72 hours to two years, with a typical requirement of within 30 days from the injury. After the claim is filed, your insurance provider will review the claim and either approve or deny it. Claims are usually approved, but if one is denied, your employee has the right to appeal the denial in an administrative hearing. Your employee can choose to hire an attorney to represent them and possibly pursue a larger settlement. Not all employees will choose to go this route,  because it means risking a lower settlement. This course of action is most common for permanent disability claims. 

The Settlement Process

If your employee does choose to hire a lawyer to pursue a larger settlement, they will pursue what they (in discussion with their lawyer) believe is fair compensation. In most cases, they will seek a  workers compensation settlement that covers:

  • Attorney fees
  • Disability payments if the injury leaves the worker permanently impaired
  • Medical bills
  • Surgery and future medical treatment
  • Cost of retraining to perform the job, if necessary
  • Lost wages and future wage loss

How Workers Comp Settlements Are Paid

Once the calculation is finalized with the employee and their attorney, they will begin negotiations with your insurance company. The settlement will generally be a compromise between your insurance company and the attorney, and can be paid in one lump sum amount or as a structured payment plan. If your employee is not willing to settle, the case will go to trial, also known as a worker’s comp hearing or workers compensation lawsuit. 

terms of payment circled in pen with a silver pen next to it

Once your employee accepts a settlement, they must waive their right to sue you. However, if they got hurt because of your (or a third party’s) direct negligence, then the employee can bypass the workers compensation process all together and instead choose to sue you or the third party for damages.

Employer’s Role During Settlement

There is not much that you can do during the settlement negotiations except to make sure it goes as smoothly as possible. To do this, you will need to keep the lines of communication open and stay updated throughout the whole process. The best way to do this is by reaching out to your insurance company.

Protect Yourself With The Right Insurer

If you currently have workers comp benefits but would like to search around for other options, or if you are starting a business and are in need of workers comp insurance, come to EZ for free instant quotes from one of our licensed agents. Because every state has different rules on workers comp insurance, it is important to know the requirements for your specific state. Your EZ agent will be highly trained in your region’s rules and can guide you through the process, while comparing quotes for all the plans in your area. We will find you the best plan for your budget. To get started, simply enter your zip code in the bar above, or to speak directly with one of our licensed agents, call 888-615-4893.

The Beginners Guide To Worker’s Compensation

Do you know everything you need to know about Worker’s Compensation? It’s not a subject many people discuss at the dinner table, but it’s incredibly important to have when running a business in case someone is injured. A small thing like a loose nail or an unstable walkway could spell trouble. 

smiling worker in an office with a be happy sign
It’s easy to be happy when you know you’re covered!

Before an accident happens, it’s imperative for a business owner to understand the terms of Worker’s Compensation coverage, how to qualify as an employee, what it covers, and what it will cost you.

What Is “Worker’s Comp?”

This agreement states that as long as an employee receives wage replacement and medical benefits, the employee will not sue the company for negligence. Meaning, if you’re injured on site due to something workplace related, you’ll be covered for the amount of work you miss plus hospital bills. But, you cannot sue the company specifically for failing to take proper care. This protects employers and employees.

It’s state-mandated, and the particulars change based on your location. EZ.Insure’s agents are familiar with this information, local or not, so by calling us, you’re saving some time.

Good news is, safety regulations are solid nowadays. 

employees with talk bubbles asking about insurance
Your employee may have questions for you during this time. EZ.Insure will give you the knowledge to answer securely.

How Can Your Employee Qualify?

For an injured employee, there are only four checkboxes to qualify:

  1. You must be employed by the company.
  2. Your illness/ injury must be work-related.
  3. Your case must fall in state guidelines.
  4. The employer must have Worker’s Compensation insurance.

What Is / Is Not Covered by Worker’s Compensation? 

Workers Compensation insurance covers most workplace injuries, but you may be refused assistance if your injuries are self-inflicted, occurred during a crime, or if your actions during your sustained injury violated company policy. For example, if your employee happened to sustain an injury while robbing you, rest assured their injury most likely won’t be covered.

The injured employee doesn’t need to be injured “on-site” to be covered. Worker’s compensation can also come into place when your injury is sustained, and it’s job-related. This could be if your company plans a trip overseas for a meeting, and your employee happens to break a limb during the outing. 

When it comes to your medical expenses, you’ll find support with diagnosis and treatment. Depending on your state, it can also provide disability payments, rehabilitation, or retraining. 

This should provide ample cushion for your employees to recover and return to work.

What Are the Costs?

The average cost of a worker’s compensation claim is $38,000 (from 2005). This is a combined total of both the medical side and loss in productivity. That’s a down payment for a house or a mid-size car. 

For a company, the average cost per $100 in employee wage ranges from $0.75 to $2.74. It doesn’t seem that bad, but this does depend on the state. If you’re looking into getting this for your company, contact your local office to get specific information. 

Do Worker’s Compensation Costs Change Per Business Type?

cranes with people working on construction
Depending on what your company does is how much you’ll be quoted for worker’s compensation.

Depending on your company, the money outflow is going to fluctuate. For example, in the office building, your cost per $100 goes down to about $0.12. It doesn’t sound that bad, but it’s because injuries happen less often in this environment.

If you’re a painter or a landscaper, this average jumps up to $7-9/$100. You’ll have to take a look into the work you’re doing, and how it may affect an employee. Your business needs a strong hand with inside knowledge to provide you with the best quality insurance.

EZ.Insure has the experience to help you excel. Your agent will answer any questions you have, compare different plans for you, and even sign you up when you’re ready, free of charge and without having to worry about being hounded by endless calls. To get started simply enter your zip code in the bar above, or you can speak to an agent by emailing replies@ez.insure, or calling 888-350-1890. EZ.Insure makes the entire process easy, and quick.

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