Workers’ comp is not the same as Liability Insurance. However, these forms of commercial insurance cover different risks that your business might face in the future. Choosing the right coverage for your business is a must. Worker’s Compensation and Liability Insurance is not the same thing. Liability insurance covers the third party when damages have been done for which the policyholder is legally liable. While worker’s comp covers medical expenses and lost income as a benefit for the injured employee while in the course of his employment regardless of who’s at fault.
What is Workers’ Comp Insurance?
Worker’s compensation is a form of business insurance coverage that provides coverage for employees who suffer injuries in the course of their employment. Most states require business owners that have one or more employees to carry workers comp policy. Workers’ comp covers benefits such as medical expenses, lost wages while the injured employee is getting his full recovery. This policy will apply as long as the accident happens in the course of his employment and regardless of who’s at fault.
How does Workers’ Comp Claims Work?
Workers that suffer a workplace injury or illness must report immediately the incident to their employer. There are different reporting periods in each state, in the event, an employee did not meet the specified deadline, the employee might not receive benefits.
Does Small Business Need Workers’ Comp Insurance?
Workers’ compensation insurance is the top way for small businesses to protect their employees in certain accidents. As a business owner or an employer, you have a legal obligation to provide a safe workplace for your employees. However, accidents may happen even if you are in the safest place. California State law requires business owners that have at least one or more employees to carry workers’ comp insurance. Failure to comply to carry workers’ comp insurance may lead employers to criminal prosecution, fines, and expensive litigation.
1. Uninsured Employer
If an injured worker files for worker’s compensation claim and the employer or business owner does not carry workers’ comp, the employer must sustain legal representation. Under the California Labor Code, in the event, a workers’ compensation appeals to the Director of Industrial Relations and proven that the employer does not carry workers’ comp. They can issue a penalty up to $10,000 per employee if the injury is compensatory. It can go up to a maximum of $100,000, and $2,000 per employee even if the injury is not compensable.
2. You Must Be an Employee
Not all workers can be certain as employees under workers’ compensation eligibility. Most like independent contractors, like freelancers, consultants generally are not eligible for workers’ compensation coverage. Business owners typically misclassify workers as independent contractors to avoid paying payroll taxes or workers’ comp premiums. Generally, workers comp does not provide coverage for volunteers.
3. Injury or Illness Must Be Work-Related
Any accident that may happen to an employee regardless of who’s at fault is covered under workers’ compensation insurance as long as it happened during the regular course of its employment. However, injuries that typically happen on an employee’s lunch break are not covered by workers’ comp as it considered a not work-related injury. For example, you are going to have lunch outside the company’s premises and get into an accident that instance would not be covered. However, if you were hurt while having your lunch inside the company’s premises, the injury will be considered work-related.
4. Reporting and Filing Deadlines
In order to receive benefits, you must meet the deadlines in your state in reporting the injury to your employer and filing a workers’ comp claim.
What to do after reporting the incident?
If done reporting the injury or illness, the business owners and employees next steps are:
1. Go to an approved health professional
After filing the report you must seek medical assistance as soon as possible, health and benefits may put at risk if any delay will happen. The healthcare professional will provide a medical report to use in filing an employee’s injury claim.
2. Claim Process
Business owners are responsible for providing the forms that are needed, the claims information, and all the business company details.
3. File the Claim
The injured employee must file the claim with the company employer and be attentive to the reporting deadlines. The claim should have any paperwork mandated by the state, medical reports, and forms.
What is General Liability Insurance?
General liability is a form of commercial insurance coverage that secures your business against certain liability claims. Typically, this form of policy covers your company from claims such as bodily injuries and property damage due to your products, operations or services. On the other hand, this coverage does not provide coverage for employees who suffer injuries. Furthermore, General liability covers third-party which is non-employee damages.
What does General Liability Insurance Cover for Business?
General liability insurance or also called as Commercial general liability insurance or business liability insurance provides coverage for:
- Covers the cost of property damage claims against your business
- Medical cost in the event accident occurs and someone suffers an injury at your company
- Advertising injury claims to your business
- Lawsuit costs, settlements, and judgments for covered claims
General Liability Insurance typically does not cover:
- Damages to your business property
- Personal injuries claims caused by your own employees
- Malicious or illegal acts that are done on purpose
- Vehicle accidents that you or your employee is involved using the personally owned vehicle while used for work.
- Injury and illness of employees happened in the course of employment.
The risk you may face of not having
General Liability Insurance
In case, your business gets involved in an accident and someone files a claim against your business. You may face judgments, settlements, legal defense costs and court fees and that can be extremely expensive.
- Generally, you will need a legal counsel, that can cost $100 to $200 for just an hour.
- Costs can easily go higher for about $75,000 if the claim ends up in court.
- You’ll need to spend thousands of dollars, even if it doesn’t go to court.
- Fortunately, the right General Liability Insurance policy could help cover most of these costs. Example Damages:
- Bodily injuries that an individual may suffer from your business operation.
- Accidents that may cause damages to other property while conducting your business.
- Advertising injuries (Libel or trademark infringement).
Additional Coverage
In the event that your business is sued in any incident mentioned above, general liability covers attorney’s fees, court expenses, and settlements up to the policy limit. By not having general liability for small businesses you may end up in bankruptcy, considering the large enterprises in paying lawsuits expenses from their own pocket.
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