Workers’ compensation insurance is meant to cover the costs resulting from a work-related injury, illness, or death. However, employers, too, can benefit from this type of liability coverage. Perhaps the most obvious benefit of workers’ compensation insurance for employers is that it protects them from being sued by an employee for a work-related injury, illness, or death.
Here’s a detailed look at the three ways in which workers’ compensation benefits employers.
1. Creates a Safer Work Environment
Ranging from lost productivity to recruiting and onboarding costs, the costs resulting from a workers’ comp claim can add up quickly, causing your business to experience substantial financial losses. It costs an average of $400 and $1,300 to onboard and train an employee, respectively, as reported by the Association for Talent Development.
Moreover, an unsafe work environment is likely to cause adverse psychological and physical effects on your employees, leading to decreased employee productivity. For example, more than 25% and 50% of injured workers tend to suffer from depression and anxiety, respectively, according to a recent study. Of course, more workplace accidents mean higher workers’ comp costs and vice versa. Thus, workers’ comp costs can incentivize employers to create safer work environments for their employees, which would, in turn, assure greater employee productivity and increased returns.
2. Prevent Lawsuits
Suppose your business lacks workers’ compensation insurance coverage. In that case, if your employees and their loved ones sue you in civil court for a work-related injury, illness, or death, it can prove to be expensive. The average workers’ compensation settlement in the U.S. amounts to around $20,000. This means that if you were to lose such a lawsuit, the resulting financial loss could easily ruin your business. Additionally, it could open you up to a criminal investigation. One of the main benefits of workers’ compensation for employers is that it protects you from such lawsuits, reducing the possibility of complicated legal problems.
3. Improves Regulatory Compliance
As a business owner, you contribute to the economy not only by creating jobs but also by promoting trade. Being a productive member of society, you most likely would not wish to be on the wrong side of the law, especially because of your business activities. However, failure to carry workers’ compensation insurance coverage is a surefire way to get into legal trouble. Remember, nearly all states in America require employers to carry workers’ compensation insurance, meaning most states across the country have a workers’ comp program. While the specific workers’ comp laws may vary across state lines, the general penalties for violating workers’ comp laws include fines and/or prison time.
Thus while workers’ comp will ensure that your company is protected from financial loss, it will also assure your employees that their needs are being taken care of, thus promoting an environment of peace and security throughout the organization.
Do you have any additional questions about business insurance? Contact the experts at First Insurance Solutions. We are ready to help you with all your coverage needs.