The industrial revolution brought about extensive change in the U.S. – including the introduction of the worker’s compensation system. Today, most employers are legally required to purchase workers compensation insurance, although laws can vary from state to state. This program was developed not only to protect employees against medical bills and vocational rehabilitation due to a workplace injury but also to protect employers against potential lawsuits. At Harnish Insurance, we help businesses of all sizes in the greater Mesa area find workers compensation coverage that extends to injury and illness incurred during work.
How Workers Compensation Protects Workers
Before the worker’s compensation system began, employees and their families had to use the legal system to pursue compensation of damages due to a workplace injury, illness, or death. Not only was this a costly and timely process, but it was also one that many could not afford. Furthermore, injured workers were often left without compensation if the court determined the employer was not directly responsible for the injury, illness, or death. This left many disabled workers out of work and without income.
To remedy the problem, states began adopting the worker’s compensation program, which required employers to purchase insurance that pays for certain expenses related to employee injuries and illness – regardless of fault. This assures the workers receives the compensation he or she needs without having to navigate a lengthy and uncertain litigation process.
How Workers Compensation Protects Employers
Although workers compensation insurance was designed to protect workers, it also includes protections for employers. The system generally works because employers agree to purchase no-fault coverage, and employees agree in turn to file insurance claims instead of filing suit. This helps prevent many lawsuits, ultimately saving the employer time and money. Essentially, it reduces an employer’s costs for workplace injuries to their administrative and loss prevention costs, workers compensation insurance premiums, and the cost of deductibles when filing claims.
There are rare cases in which a worker may still sue the employer for damages, although these are typically limited to certain circumstances that vary from state to state. If your business is sued for a worker’s injury or illness, workers compensation insurance may help cover your defense.
A typical workers compensation insurance policy is divided into two different parts. The first part defines payments to injured or ill employees, as well as the families of deceased employees. Unlike other types of coverage, workers compensation is not generally subject to limits. In other words, the insurance company takes on the full weight of the employer’s financial obligation to compensate the employee.
The second part of a workers compensation insurance policy references the employer’s actual liability. Unlike the first section, this coverage is capped by a limit. Under this section, the policy defines how much the insurance company will pay if an employee decides to sue the employer for compensation of damages that are not covered under the state’s standard workers compensation statutes. It can also help cover third-party lawsuits that arise as a result of an employee’s illness or injury.
Most Employers Need Workers Compensation Insurance
Most states – including Arizona – have very specific laws determining who must purchase workers compensation insurance. Here in The Grand Canyon State, workers compensation is generally required if you have employees, whether full-time or part-time. In fact, workers compensation coverage is required regardless of who your workers are – even if they are family members, minors, or aliens.
Your business may not need workers compensation insurance if you operate as a sole proprietor with no employees. Otherwise, coverage is generally required – even if you are the sole employee of an L.L.C. or a business you own and incorporated. Exceptions apply to domestic servants who work in your home, as well as independent contractors. However, you should consult with your accountant and legal advisors to determine who is an independent contractor and who is considered an employee. Typically, an employee is someone who works primarily for your business instead of multiple entities. It is also someone you supply tools and equipment to, have the right to hire and fire, or who you assign hours to.
Managing Your Workers Compensation Costs
Workers compensation insurance costs can vary according to your industry and a wide range of other variables. One of the most influential factors is your history of loss events. If your business is part of a high-risk industry or you have a track record of multiple workplace injuries, your premiums may be higher than those of other businesses. To help reduce your insurance costs, work with your insurer to develop a loss prevention plan that helps you manage your risks. By implementing certain safety measures, you may be able to lower your claims rate and in turn, reduce the cost of your coverage over time.
Another way to manage your worker’s compensation costs is by working with an independent insurance agent at Harnish Insurance. Independent agents can provide the same guidance and support as other agents; only they can shop and compare policies from multiple insurers instead of just one. Your agent can also advise you on additional ways to save on premiums, such as by raising your worker’s compensation insurance deductibles.
Workers Compensation Insurance Quotes
If you own a business with at least one employee in the greater Mesa area, workers compensation is essential. Contact Harnish Insurance to find out more about Arizona workers compensation insurance and to request your free quote. We look forward to serving you soon.