Despite workers’ compensation insurance being so important for every U.S. employer, the insurance coverage remains largely misunderstood and overlooked by business owners. Texas, unlike other states, does not require an employer to have workers’ compensation insurance. However, it is highly encouraged to purchase and every business, large and small, can benefit from the coverage it provides. To learn more about workers’ compensation insurance in Texas, here is a guide to help you understand the ins and outs of coverage.
The Small Business Owner’s Guide to Workers’ Compensation
What is workers’ compensation insurance?
Workers’ compensation – also called workers’ comp – is the system put in place to cover employee injuries and lost wages when they are injured while on the job. It also covers death benefits when an employee has died while working. Not only does this coverage protect your employees, but it also protects you should your employee choose to sue you for damages.
What coverage does workers’ compensation provide?
- Medical care for injuries that an employee sustains in their line of work
- Vocational rehabilitation to return the worker back to health and get them back at work
- Disability benefits if the worker is unable to return to work after the injury
- Death benefits paid out to the employee’s surviving family if he or she suffers a fatality
- Employer liability in the event of potential negligence
- Legal expenses if the workers’ compensation claim is challenged or if an employee sues the employer for damages
Even though workers’ compensation insurance is not required by businesses in Texas, the coverage works to protect business owners. In a nutshell, it covers medical expenses and lost wages for employees injured at work, and helps to pay for employer legal defense fees if a lawsuit arises out of the injury.
Does my business need workers’ compensation insurance?
Workers’ compensation is advised for every business that has even one employee. This coverage is relatively affordable and works to protect your team and business if the worst happens. Paying out of pocket for work-related injuries can be financially devastating, especially for start-ups and small businesses that don’t have a lot of emergency finances. Medical costs, rehabilitation expenses, and lost wages could cost hundreds of thousands of dollars, depending on the severity of the injury. Not every business has that kind of money reserved for emergencies. In many cases, those businesses that choose to go without coverage and that suffer an employee injury risk losing their business and shutting their doors for good. Getting appropriate coverage for yourself and employees will help you to avoid this type of financial loss.
How to get workers’ compensation insurance in Texas
The first step to finding reliable worker’s compensation insurance is to ask for quotes from two or three insurance agencies. Finding a workers’ compensation insurance provider that offers a quote quickly can streamline the process, saving you time and money. What’s more, if you have a small business, you may want to work with an insurance provider who specialized in small business insurance. They will better understand your risks and know how to secure reliable coverage for your needs.
Getting a workers’ compensation quote is not as challenging as you might imagine. With a bit of preparation, you will easily be ready to obtain a quote for your business. You will need the following information when enquiring about coverage:
- Name and description of business
- Industry operating in
- Location of business
- Number of locations
- Federal employer identification number (FEIN) or Social Security number (SSN)
- The business structure (such as limited liability company (LLC), corporation, sole proprietorship…)
- Desired start date of coverage
- Number of employees
- Annual payroll based on location and job type
- Workers’ compensation claims history
- Applicable class codes
Every business is assigned an industry classification code that is used to showcase the relative risk employees face. It helps to recommend a baseline cost to insure workers in that business.
How to get a workers’ compensation quote
Whether you’re an experienced or first-time buyer, securing workers’ compensation insurance for your small business all starts with getting a quote. To get started, you will need to provide the above information about your company and employees.
Work with the right insurance agency to secure reliable insurance for your needs. When you work with an agency that cares about your business, you can have peace of mind that you have the right coverage in case the worst does happen.
The cost of your workers’ comp will depend on a lot of different factors, some of which may be out of your control. The four main factors insurers consider when estimating your premium include:
- Location – The location of your work will impact your workers’ compensation insurance costs.
- Type of work – The type of work your employees perform determines your class codes. For example, office workers will have lower risks than factory workers.
- Size of payroll – Your total payroll will impact your workers’ compensation costs, as will the size of your workforce.
- Claims history – Insurers will consider your history of claims using what’s called an “experience modification factor”.
Are you looking for the right workers’ compensation insurance for your business? The right business insurance policy should address your risks while staying in line with your budget. At J. Archer Insurance Group, our experts help you find the best coverage for your needs. Serving Houston, Texas and beyond, contact us today.