In today's economy, no business can afford to be without insurance. This is especially true for businesses that have any employees on its payroll. When a business does not have insurance, they could suffer major financial loss or permanent closure. An uninsured employer can have claims brought against its organization, and this is a situation that most companies want to avoid. As you start your new business, it's important to understand the value of workers compensation insurance.
What is an Uninsured Employer?
Businesses that do not have insurance are designated as an uninsured employer in workers' compensation law. This term is also designated to business operations that do not provide their employees with certain benefits related to insurance. Injury benefits are one type of coverage that is required by all employers. Every state has this law in place, and all businesses must comply.
What Type of Coverage is Necessary?
A business with employees must have workers compensation insurance in place. It must be distinguished from basic liability coverage and health insurance. A company can also have a bond or self-funding in place of worker compensation insurance. The amount of this bond will vary from state to state.
What Happens when an Employer is Uninsured?
When a business does not have insurance in place, it can face serious legal problems. All uninsured employers face three types of claims. They are civil, criminal, and workers compensation claims. Third party claims are also brought against an employer, a general contractor, and any other parties that might have contributed to a worker's injury.
All states have funding in place to cover the cost of injured workers in the event that an employer does not have insurance for this purpose. So, when a company is uninsured, and one of their employees is injured, they will eventually have to pay off the claim, or be subject to criminal or civil penalties.
Employers without coverage can also be hit with additional penalties. A business that does not secure workers compensation insurance could put higher up executives of the organization at risk and held personally liable for medical care. They could also deal with fines, be required to pay off compensation payments, be given penalties, and face possible criminal prosecution. The bottom line is that employers who do not have coverage are not doing good business.
Above is a brief overview of why your new business needs to have workers compensation insurance. Discuss the details with a workers compensation attorney like Ransom, Gilbertson, Martin & Ratliff, L.L.P to help ensure you have the coverage amounts you need.