Talking With Insurance Companies

Workers' compensation insurance is an important type of commercial insurance that many businesses need. In particular, there are four things that every business owner should know about workers' compensation and the protections it offers.

1. Purchased Separately from Other Insurance Policies

First, workers' compensation insurance is commonly purchased on its own. Even when businesses get other types of insurance coverage through a package policy, workers' compensation is normally acquired separately through its own policy.

One result of this is that bundling discounts aren't typically available for workers' compensation insurance. Other discounts may be available if a business institutes measures to reduce workplace accidents, but bundling discounts are only available on other types of insurance coverage.

2. Required for Many Businesses

The majority of businesses -- but not all businesses -- are required to carry workers' compensation insurance. In general, state laws require that all businesses with employees maintain a certain amount of this coverage. Some states' laws differ from the norm and have exceptions, though, so a few businesses might not be legally required to carry the coverage.

Additionally, businesses that don't have employees don't need workers' compensation. Sole proprietors and one-person limited liability corporations, for instance, don't need this coverage.

Even when a business isn't required to have workers' compensation, though, purchasing the coverage is often a wise decision. A policy can give a business important protections if a worker is seriously injured on the job, and policies can also be adopted to cover business owners in case they're hurt while working. Health insurance may exclude work-related injuries.

3. Deters Employees from Suing

Simply carrying a workers' compensation policy doesn't prevent employees from suing a business if they sustain a serious injury or illness as a result of work. A life-threatening injury or a chronic illness could still lead to an expensive lawsuit for the business to settle or defend in court. 

In the vast majority of cases, however, workers' compensation greatly deters employees from suing if they are injured or become ill. Employees will almost always choose to file a workers' compensation claim instead of filing a lawsuit because a claim is a faster process and won't result in an expensive court case. When a claim is fulfilled, the employee waives their right to sue.

Thus, employees still technically can decide to sue a business if they're injured at work. Workers' compensation creates a strong incentive to file a claim instead, though, and employees can't do both.

To learn more, contact a company that offers workers' compensation.