Workers' Comp Coverage: Why It's Not Just for Your Employees
In most states with more than a few employees, workers’ compensation is a vital risk-management tool. It covers your statutory obligations for medical treatment, lost wages, and partial or total disability if any of your employees are injured or protract a work-related illness on the job.
Of course, if you have more than a few employees, most states require you to purchase workers' comp coverage. In many states, however, business owners and partners are not required to cover themselves when buying their company’s coverage.
A Vital Safety Net
Workers’ compensation coverage may be the only thing that stands between you and the soup line if you are injured on the job. If you are a sole proprietor or business principal, you should seriously consider including yourself in your coverage. Continuing wages are usually critical if you are seriously injured on the job.
A sole proprietor contractor I know fell off a ladder last year on a job. As he fell, he caught the roof edge with his dominant hand, breaking his fall to the ground. However, he tore his rotator cuff -- and despite surgery, is still unable to work many months later. He isn’t sure if he’ll ever be able to work again.
Unfortunately, he didn’t buy worker’s compensation coverage, so more than his shoulder is hurting.
Can You Afford NOT to Insure?
Businesses with more than a few employees in most types of business are required by the states where they operate to buy coverage for their employees. That makes the decision simple. There is more to consider, however. I think the question you should ask yourself when considering workers’ compensation coverage for yourself is: “Can I afford a protracted ‘no-work’ period?”
If you cannot, you definitely should buy work comp for you in addition to your employees.
“From my perspective, business owners should have workers’ compensation coverage unless they are assured that their health care will cover occupationally related injuries and they have a disability income solution,” said John Putnam of Putnam Assurance & Risk Services of Colorado Springs, Colorado.
“Generally, most business owners decide on cost, so contractors who are most exposed [to injury] rarely purchase workers’ compensation due to the high cost of their classifications. Generally, the only exceptions to this rule are if they have seen another self-employed person struggle through an occupational injury.”
Risk management consultant Jerry Trupin of New York goes even farther: “Even those who are not required to carry the coverage should, in my opinion, absolutely carry the coverage unless they are judgment-proof or desire to become so.”
Workers’ compensation is a very important coverage for all business owners. Call your agent and at least obtain a quote. Then compare the annual premium with the amount you stand to lose if you, as a small business owner, cannot come to work after an occupational accident. You may find the premium a bargain.
