01 Apr Workers’ Compensation FAQs
Workers’ compensation is insurance coverage paid by the company to provide benefits to its employees who are injured or become sick on the job. It’s a win-win for the employer and employee. Workers receive medical care they need, and employers receive assurance that they will not be sued by the affected employee.
While we recommend all businesses obtain workers’ compensation coverage, businesses employing 5 or more employees (full or part-time) or operating in residential construction are required by the state to have workers’ compensation coverage.
Consequently, as an employer and/or business owner, it’s important that you understand how workers’ compensation coverage works. Below, I share the answers to the questions that I’m frequently asked by clients or prospects about workers’ compensation.
What does workers’ compensation cover?
Workers’ compensation covers injuries or illnesses suffered while the employee is performing his/her job duties. It covers their medical bills and up to 66 percent of their lost wages.
How do claims work?
When an employee is injured, he/she fills out a first-report form. Next, the injured employee visits a physician recommended by the employers’ insurance carrier. The insurance carrier will then send an adjuster to examine the claim. Once the adjuster comes to a conclusion, the insurance carrier will pay the medical bills and lost wages. The insurance carrier will also work with the employee to determine when and how he/she will return to work in the proper way.
What industry do you see the most workers’ compensation claims?
Industries with higher hazards, such as construction, manufacturing, and mining, often have an increased frequency of claims.
How is the cost of insurance determined?
The cost of a company’s workers’ compensation coverage is determined by carrier rates. A businesses’ payroll determines their exposure basis. In fact, there is a formula that calculates the premium based on payroll. The largest mod factor in the formula is historical safety.
Like your auto insurance premium, if your company has several claims, your rate increases. However, with proper risk management tactics, you can receive a discount.
How can we lower rates?
At Byars|Wright, we believe risk management is just as big of a part of workers’ compensation as the coverage itself. We realize that nobody wants to pay more than necessary. Fortunately, employers can take control of their rate by how they run their business and the safety precautions they take.
Some examples of risk management practices include hosting regular safety meetings, enforcing specific restraints, requiring that employees wear proper safety equipment, and finding strategic ways to transfer risk.
As a client of Byars|Wright, we will work with you to ensure you are managing your risks and minimizing claims. For example, if your employees work with sharp-edged metal, we will recommend that they wear safety equipment to prevent injury. Having regular safety meetings is another practice we highly recommend to keep safe practices top of mind with your employees. Complacency is where they get hurt.
Our team of experts take unique approaches to your risk management strategy depending on your business.
For more information on workers’ compensation and more, contact or connect with Byars|Wright today!
