1. Major financial losses
One of the biggest risks of not having workers’ compensation is the financial burden of workplace injuries for employers. If an employee (or even you, as the business owner) has an on-the-job injury, workers’ comp can help cover medical expenses, lost wages, legal fees and other related costs.
At first, workers’ comp insurance might seem like an unnecessary expense. However, the cost of going without it could end up being far greater than the premium for the policy. A single accident could wipe out your business’s savings or force you to take on significant debt.
2. Legal consequences
If your state requires workers’ comp insurance but you don’t have it and an employee gets injured at work, you may be liable for the full cost of the injury. This could include defense costs in the case of legal action, damage for pain and suffering and any settlements. This could not only negatively impact your finances, but also the reputation of your business (and your ability to win new jobs).
3. Impact on eligibility for some contracts and professional licenses
In certain industries, workers’ compensation can be required for obtaining a license or winning a contract. For example, general contractors may need to show proof of workers’ comp insurance before bidding on jobs or applying for a business license.
Even if your work isn’t in a highly regulated industry, you could still face challenges if clients want proof of your coverage to ensure you’re financially protected in case of an accident.
How to get the Workers’ Comp coverage you need
Workers’ compensation insurance is relatively easy to obtain and, in many cases, it’s more affordable than you might think.
Here are some steps to get started:
- Check your state’s requirements. Some states mandate workers’ comp as soon as you hire your first employee, while others have broader thresholds. Be sure to check your state’s laws and insurance rules to avoid potential penalties.
- Consider your risks. Even if you don’t have employees, think about your own health and wellbeing. You might still need workers’ comp for yourself.
- Get an instant quote. If you’re unsure about what kind of coverage you need, start by getting an online quote from an insurance provider. Insurance companies like NEXT will get you a customized quote based on your business’s specific needs in just a few minutes.