Workers’ Comp Insurance for Small Business: 3 Facts Business Owners Should Know

Are you looking to purchase workers’ comp insurance for small business?

If yes, you’re probably a new business owner who’s planning to bring in employees. Even if you aren’t a new business owner, it’s safe to assume you’re running a one-man operation.

But what is workers’ comp insurance and how does it work? It is a must to purchase this type of policy, especially when you already have general liability insurance? What are the repercussions of not having workers’ comp insurance?

There are several questions around this type of insurance, and we’re here with the answers. To help you out, we’re sharing a couple of facts you should know about workers’ compensation insurance.

Read on!

1. Worker’s Compensation Insurance Is Mandatory…

…for businesses with employees.

That’s right. It’s a legal requirement that your business purchases workers’ comp insurance if you have employees. The number of employees you need to have before you’re legally required to purchase this insurance varies from state to state since worker’s comp laws aren’t federal laws. They’re state-specific.

Across most states, though, any business with more than one employee will need to purchase worker’s comp.

There are exceptions depending on the type or classification of the employee, so be sure to do adequate research and have a good handle on your state’s requirements.

2. Workers’ Comp Helps Your Business

As a business owner, it’s easy to think that workers’ comp insurance laws are punitive. Buying this policy adds to your business expenses since you have to pay out annual premiums to insurance companies.

Here’s the hard fact: workers’ comp insurance isn’t a punishment. It helps your business.

You see, the purpose of workers’ compensation insurance is to compensate workers who are injured on the job. Without this policy, you’d have to pay injured workers out of pocket.

Did you know the average workers’ comp claim is about $40,000?

Can your business afford to make this payment out of pocket? Maybe you can afford to make it, but what if several employees were injured at the same time? Suddenly you’ll be looking at a six-figure bill.

To purchase small business workers’ comp is to protect your business.

3. Workers’ Comp Premiums Vary

By now you’re probably wondering what the premiums for workers’ comp insurance look like.

Well, the national average is between $400 to $800. What your business will pay depends on a range of variables.

For example, if you have 10 employees, you’ll pay more than a business that has just one or two employees. Your location also matters, as does your business’s workplace accident history and industry.

A business that operates in an industry with many incidents of workplace injuries, such as mining, will pay more than one that operates in an industry where accidents are rare.

Workers’ Comp Insurance for Small Business Is Good for Your Enterprise

If you have an employee, you really might have no choice but to purchase workers’ comp insurance for small business. Even if you had, though, it would still be prudent to purchase it. Workers’ comp protects your business.

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