Work Compensation: Common Mistakes Business Owners Make

The law requires most businesses with 4+ employees to carry work compensation insurance. As an owner, chances are you are already snowed under by operational costs and concerns about the general state of your industry and the economy. The last thing you want to do is to pile on yet more expenses. However, if you under-insure your employees, you could face stiff penalties, including fines and significant legal trouble.

Work compensation remunerates workers who get hurt on the job or hurt in the course of doing business. For instance, if an employee gets into a car accident on the way to a conference, she can make a claim against your company.) Insurance will cover medical bills, wages lost, therapies, and other costs. If you lack good work compensation insurance -- or don't have enough of it -- those benefits could come out of your business' coffers -- or your own pocket.

Common Costly Mistakes

  • Not providing enough coverage -- As we discussed above, if you fail to cover all employees with enough coverage, and you could suddenly find your business swamped by chronic costs.
  • Confusing the definition of "independent contractor" and "employee" -- You do not need workers compensation insurance for independent contractors. But you do need coverage for employees. A contract stating that a worker is an independent contractor may not protect you. That "contractor" could turn around and claim that he was actually an employee for insurance purposes. Talk to your lawyer to make sure you have the status of your employees correct.
  • Overestimating your coverage -- Work compensation doesn't protect you from being sued if your gross negligence causes harm. Nor does it protect you or your business from other kinds of exposure. Talk to industry peers and a reliable agent to learn what other coverages you need. Common categories include business interruption insurance, disability insurance, commercial auto insurance, general liability, and property.

Cost Saving Measures
To prevent work compensation insurance costs from running amuck, purchase multiple policies with one insurer or bundle policies into a business owners policy BOP) package. Keep the workplace safe by tuning machinery and vehicles and instilling a culture of safety. For instance, if you run a business that employs typists, purchase ergonomic keyboards and chairs for your staff, so that they won't endure repetitive stress typing injuries. Lastly, shop around to save.

Use NetQuote -- a free and highly regarded online service that's been in business since 1989 -- to secure 5+ work compensation quotes right now. With better information, chances are you can find better rates and optimized coverage.

See how much you could save today on your insurance. Get your free business insurance quotes today!