The Ins and Outs of Workers’ Compensation Insurance
Did you know that the State of Georgia requires any business with three or more employees to provide workers’ compensation coverage? And what is workers’ compensation anyway?
We answer questions like this every day, so in this post, we wanted to dive into the ins and outs of worker’s compensation to help you learn how to protect your workforce without breaking the bank. After all, it’s what you don’t know that can hurt you the most!
What is workers’ compensation?
Workers’ compensation is an important form of business insurance that covers the costs of employee injuries and illnesses. While every business owner should strive to create as safe a working environment as possible, accidents and injuries cannot always be prevented. When they arise, it’s important to have a policy in place to pay for medical expenses, replace lost wages and cover any costs associated with employee rehabilitation.
Workers’ compensation works to protect both the employer and the employee, as it ensures injured workers have access to medical care and other benefits and shields employers from potential lawsuits. Up-to-date coverage also keeps your business compliant with state regulations, mitigating the risk of fines, penalties, and even imprisonment!
How does it work?
Coverage and benefits are mandated by each state, but most policies will cover medical expenses, lost wages, disability benefits, and ongoing care costs. The vast majority of injuries sustained in the workplace are covered, as well as any that occur in the ‘course and scope of employment (for example in a company car or during a work trip). Workers’ comp also covers injuries sustained during major events like terrorist attacks and natural disasters – but with so many variables, how is the cost determined?
How much does workers’ comp cost?
The amount paid for workers’ compensation is a fixed cost for each $100 of the company’s payroll. However, a premium is calculated based on a number of factors:
✔️ State laws: each with their own requirements and penalties.
✔️ Company size: the larger your workforce, the more it will cost to cover them.
✔️ The nature of work: a graphic designer will cost less to cover than a flight engineer due to the lower level of risk they face.
✔️ History of claims: otherwise known as the Experience Modification Rate (EMR).
Businesses are also grouped into ‘classes’ with organizations that display comparable workplace injury patterns, creating a fair and equitable system that responds to losses proportionately. There are however a number of indirect costs that employers should be aware of to keep expenses in check.
Astonishingly, The Bureau of Labour Statistics says that the indirect costs of a workers’ compensation claim can be anywhere from two to 20 times higher than the direct cost of the claim. Again, there are a number of forces at play here:
❌ Absenteeism: when an employee has to take time off to recover from an injury or illness, companies should expect to experience a loss of productivity.
❌ Rehiring costs: replacing and retraining staff is a costly and time-consuming process, and it may take a while for new hires to learn the responsibilities of the role and hit their stride.
❌ Equipment shutdowns: if – god forbid – a worker maims themselves using a piece of automated equipment, manufacturing may need to be paused and the business may be subject to a costly and disruptive investigation by federal safety officials.
Without a dedicated risk management department or business insurance specialist on board, you’re probably going to end up paying a hefty price in any event. So how can this be avoided?
Getting the best price on workers’ comp insurance
Shopping for workers’ compensation insurance can be daunting, and there are certainly a lot of factors to take into consideration. At times, it can be difficult to know where to look or how to know if you’re getting the best price.
That’s where we can help. At Rentz & Rentz, our independent insurance agents have years of experience dealing with workers’ compensation and have all the necessary tools to make sure your business meets your state’s regulations.
Our carefully selected carriers are dedicated to providing Georgians with the best level of service, helping to find comprehensive coverage at competitive rates. We provide a detailed assessment of your insurance needs at every step of the way, working to find a package that suits you best.