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Is Worker’s Compensation Insurance Required from All Businesses?

The answer to this question is no. This type of insurance is only required for businesses and companies that have workers or employees. Almost every state in the United States requires businesses that are eligible to have the insurance to secure or carry one. Companies will become eligible if they hire a certain number of employees, which vary depending on which state their business is situated. Most states even require businesses to procure the said insurance as soon as they had hired their first employee.

Purpose of the insurance

A worker’s compensation insurance covers you in case of any accidents or tragic events that may lead your workers to get injured or sick during their working hours. The insurance will be used to pay off any medical charges if there are any and your workers’ wages as well. The insurance is to maintain your workers’ well-being and guarantees their safety during the job.

Businesses that are not covered by the insurance

Companies should always check if their business complies with the National Council on Compensation Insurance (NCCI) class codes, policies, guidelines, and laws of their respective state when procuring workers’ compensation insurance. Doing so will assure you that your business is not within that category, and you can avoid violating the worker’s compensation laws and paying any penalties and fees. The following are some of the businesses that aren’t required to secure a worker’s compensation insurance.

• Business owners, sole proprietors, and partners. Business owners, sole proprietors, and business partners are not required to secure insurance in most states. There are states, such as Washington, wherein they can elect to their business as covered employees to procure the workers’ compensation, as long as they can pay the insurance premiums.

• Volunteers. A volunteer is an individual that offers services and provisions without the need to be paid. They are not considered to be an employee in any organization. The worker’s compensation insurance does not cover them since they are under a non-profit organization doing charitable tasks.

• Independent contractors. An independent contractor is not eligible to be covered by the workers’ compensation insurance of the third-party individual that is responsible for paying for the contractor’s work. If an employee is working for a specific company or industry, then he or she is covered by the insurance.

Penalties for violating the worker’s compensation laws

If businesses do not want to secure insurance that they are legally obligated to, then they will face charges or even fees to pay up for the penalty when caught. Your workers comp attorney will surely advise you against it. Most owners are considering this option to reduce or cut costs from their capital and keep the money for improving the business instead. There are a lot of optional insurances that the company over can leave out, except for a workers’ compensation insurance. The coverage is mandatory to most states, and they are strict about the implementations of the insurance’s laws and policies.

Be sure to know this matter because if not, it may leave your company or business in a critical state. Violators usually will have their business shut down if they try to avoid paying for the penalty or facing their charges. It’s always best to have your company secure all legal documents to prevent any problems.