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Workers Comp Insurance: Important Factors For Small Business

05 Jan

Workers_CompThe United States government requires all states to provide a workers compensation insurance market for registered businesses to maintain workers comp insurance on their employees, with many states including individual contractors. Other states make this an option, but it is still a sound business practice for the freelance worker.

The insurance protection provides income when they have been injured on the job, and can be especially important when a contract cannot be completed by the injured independent worker. All new small businesses should research implementing workers compensation in the initial feasibility study before officially opening. This is a necessary business expense, and can be a considerable amount of the operational budget.

Employer Protections

The purpose of workers compensation insurance is generally two-fold. It provides an income for the injured employee who has a valid claim. Injuries must be reported promptly and the employer must file the necessary paperwork. If an injury lasts more than seven continuous days, the injured employee will be paid retroactively to the day of the injury.

As noted by one workers compensation lawyer Columbia SC residents rely on, “According to the South Carolina Workers’ Compensation Commission, Workers’ Compensation Laws are designed to provide prompt and reasonable income and medical benefits to work-related accident victims or income benefits to their dependents.”

They are paid a percentage of their current salary, which is actually paid as an insurance claim from the workers comp insurance company. This keeps the business from paying for time not worked. This also allows the company to place the employee on the injured roster while recovering. In addition, the employer is protected against a standard personal injury suit which could bankrupt a company.

Employee Protections

The obvious primary protection is providing employee income during rehabilitation, along with paying all medical bills associated with the injury. Although punitive damage claims will require extenuating circumstances, such as company violation of safety codes, this protection does not include the employee injury being repaired to perfect health, or “made whole” as it is called in the legal industry. What it does provide is regular income without having to deal with a long-term lawsuit running concurrently while the employee is re-cooperating. Maintaining some form of income in short order is a much more desirable protection for the average working person, along with medical bill payment.

The Insurance Company

Depending on the state in which the business is located, there may not be many options for choosing workers compensation insurance carriers. Some states only have one, which can be highly problematic. Insurance premiums can be expensive when there is no competition in the market and the insurance is a requirement. In addition, a compliant employer who is attempting to file the claim on the employee’s behalf may find themselves in an adversarial situation with the company.

For instance, in South Carolina, there are expanded benefits that cover:

1. Medical Benefits & Choice of Physician

2. Temporary Total Disability (TTD) & Permanent Total Disability (PTD)

3. Permanent Partial Disability (PPD)

4. Death Benefits

They are a potential litigant also, and many companies routinely deny the injury claims after an investigation. The purpose of any investigation is finding a legal reason to deny a claim, and many workers compensation insurance companies operate in “bad faith” as a matter of claim policy. And, in states with workers compensation insurance monopolies, this can be a real problem for an honest business management team.

Regardless of the case particulars of a bad faith suit stemming from a workers compensation denial, honest and responsible business operators also have a reputation to protect and can be impacted by association with an aggressive and contrary insurance company. There is always a possibility that both the injured employee and the employer will need legal counsel from a workers comp attorney in stalled claims. When options are available, do the extra research.

Nadine Swayne presents this article to expand the understanding of the legalities of injured employees for small business. Try searching terms online, such as workers compensation lawyer Columbia, to gather more legal material regarding workers’ compensations laws.

Photo credit: http://www.flickr.com/photos/76029035@N02/6829409437/

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