As of 1949, Workers Compensation Insurance is required by law in all states in the U.S. Unfortunately, that’s not to say that all states treat such policies similarly – but if you’re going to run a small business with employees, you will definitely want to take some time looking at the particular policy requirements for your state and industry.
Workers compensation coverage can be quite expensive, depending on your plan and provider. That’s largely because paying out workman’s comp claims is a really expensive thing to do. But instead of having an employer take on those costs, it is necessary – and mandatory – for them to insure themselves for such an eventuality. Since there’s not really any getting around it, here’s a few tips and tricks I’ve learned over the years to help ease the process.
The first step is to assess what kind of payment plan you’re looking for. Most businesses use an approximate value to establish a baseline price. These estimates, however can sometimes leave you paying too much or too little for coverage – both of which can end up costing you in the end. The other way to do things is on a pay as you co plan that allows you to pay based on claims made – these plans also generally lack an upfront payment.
Another good idea is to take some time to look at what the policy dictates taking place at the end of the year. In the average workers compensation plan, there is a year-end audit to reassess your liability as a business. Factors in this equation include number of employees, their salaries, your business function, and the amount that was paid out in workmen’s comp claims for the year. Of course if your business is growing (or becoming inexplicably more dangerous) you would do well to try and find a policy that doesn’t include such a process.
It would also be wise to remember that managing workers compensation claims is a year-round task. If you can find a plan that integrates into your HR management software, that can ease the resulting difficulty greatly.