How to Limit Liability With Workers' Compensation Insurance

Workers' compensation insurance establishes a limit on company liability by covering those employees injured, disabled or killed on the job. Most state workers' compensation laws require it. Commonly covered under a Business Owner's Policies (BOP), workers' compensation insurance coverage requirements are determined using company payroll and workforce numbers. This coverage is designed to protect both employee and employer liabilities in the event of accidents in the workplace. Most states mandate periodic random audits of business owners to ensure that they are carrying adequate workers' compensation insurance, so any business with employees should carry it at all times.

Instructions

Difficulty: Easy

Things You’ll Need:

• Insurance agent
• Business data
• A computer with Internet access

1. Gather payroll figures, number of employees, a general business operations description, building square footage and location, insurance history, owner's Federal Employer Identification Number (FEIN) and Social Security Number, contact information and all other pertinent info before seeking a workers' compensation insurance quote.
2. Contact a reputable insurance provider to ensure the lowest cost and most thorough coverage to limit your business' liability with workers' compensation insurance.
3. Check your state's minimum workers' compensation requirements online before buying a new policy (see Resources below). This will ensure that you'll have sufficient coverage to meet the requirements of your state.
4. Limit your risk by checking customer-generated rankings of workers' compensation insurance providers online (see Resources below). This will keep a company that fails to pay claims from jeopardizing your liability.
5. Request new quotes for your business insurance needs from several insurance providers on a bi-annual basis to ensure the best rates and services available to you.
6. Conduct periodic reviews of your state's insurance requirements to ensure that your policy is up to par with the latest minimum requirements for workers' compensation insurance. This will reduce your risk of a troublesome audit and potential fines.

Tips & Warnings

• Subscribe to a policy with a reputable insurer to avoid being underinsured or overcharged for liability coverage.
• Do not assume that your business policy includes workers' compensation. Check your BOP carefully to be sure your business is covered in the event of worker injury, death or disability. Many BOP policies, especially those designed specifically for home-based businesses, leave out the all-important and legally required workers' compensation insurance unless requested specifically by the customer.