Workers' compensation insurance is a vital part of any small business. But many small business owners are never sure about what it covers. Many also believe that they don't need to have this insurance. However, being unprepared can be disastrous for a small business when accidents happen at work. It can cost you a lot of money and potentially cripple your business. Here is a debunking of myths about this insurance:
Myth 1: It's for Workers Only
Just because workers' compensation insurance is called workers' comp doesn't mean it's exclusively for workers. There is also a mistaken belief that it is for the construction industry only. Workers' compensation coverage protects all kinds of businesses — not just construction workers.
Any employees who help make your business run are covered. In addition, anyone who works on your business premises is covered, including owners and others who aren't "employees" such as independent contractors and volunteers.
Myth 2: It's Too Expensive
Workers comp can seem expensive, but it can be affordable in the end. It's usually less costly than paying higher workers' premiums for workers after you've been cited for safety violations by the Occupational Safety regulators.
Myth 3: It's a State Thing
The workers' compensation system has its roots in workers' welfare laws enacted by individual states many years ago. But federal laws affect workers' welfare too. For example, if you do interstate commerce (meaning that some operations cross state lines), then workers' comp might apply to you even if you're based entirely within one state.
Myth 4: It Doesn't Cover Small Businesses
Having workers' compensation insurance isn't just for big companies. Both small and big enterprises should have it, including home-based operations that use employees or contractors.
Myth 5: Not Needed For Only a Few People
It could be true if your business is very small, but it's good to remember that workers' compensation insurance shields you against extra liability costs. Workers' comp can help cover the costs if something happens in the workplace. Even a single person's compensation could cost hundreds of thousands of dollars and cripple your business. And if you're ever sued for a disabling injury, the insurance will come to your aid.
Workers' insurance is crucial to protect your investment, so don't wait to get coverage. It can make the difference between temporary disruption or total business closure when accidents happen. Call an insurance agent in your area such as Contractors Insurance and discuss workers' compensation insurance options to shield your enterprise from liabilities.