This post also appeared on PropertyCasualty360.
By Matt Zender
Small business insurance, and more specifically, workers’ compensation insurance, is an absolute necessity for any business.For many owners, workers’ compensation insurance programs are insufficient, or worse, non-existent—simply because they believe long-held falsehoods about workers’ compensation insurance.
Clients' beliefs in these myths can have a major impact on the success of your agency—and like a domino effect—may impact the overall quality and success of your business. Many small business insurance agents would agree, if a company’s workers’ compensation program is subpar, the weakness can leave a business vulnerable to potential risks and financial disasters—ones that are avoidable with the proper program.
5 Client Myths to Dispel
We’ve identified the most widely-believed workers’ compensation insurance myths, in no particular order:
Small business owners may convince themselves that they don’t need the added expense of workers’ comp. They might think that an injury could never happen at their company, and even if it did, they would pay out of pocket – which could be far more financially damaging then they realized.Let’s see if we can dispel these myths, once and for all.Here they are, in no particular order:
Myth 1: "I only have a handful of employees, or, I employ mostly part-time employees, so I don’t have to carry workers’ compensation insurance."
Reality: If a company employs more than one person, having a workers’ compensation insurance policy is the best way to go. In fact, in most states, if your client has more than one employee, workers’ compensation insurance is mandatory. The expenses from job-related injuries, including medical expenses and lost wages, can pile up fast. Also, companies who choose not to have workers' compensation insurance, but are required to carry it, can run the rist of heavy penalties and fines. Having the right workers’ compensation insurance program in place will protect the business on all sides.
Myth 2: "My employees are like family, they would never sue me!"
Reality: Without a workers' compensation policy in force, damages for injuries incurred at work can soar past thousands of dollars and into the millions. Without adequate coverage, employers leave themselves open to punitive damages, and pain and suffering suits, in addition to astronomical medical bills.
Myth 3: "Workers' compensation insurance is too expensive. If one of my employees is injured, I’ll just pay out-of-pocket."
Reality: As we noted earlier, in most states, workers’ compensation insurance is compulsory for a company with more than one employee. If you compare the cost of a workers’ compensation policy with the potential cost of a lawsuit, it just makes sense to be proactive with the proper coverage, as out-of-pocket expenses would be covered by a workers’ compensation policy – from lost wages to medical – can bring major losses to a company.
Myth 4: "I provide a safe workplace. My employees will not get injured."
Reality: Even in the most careful and safest work environments, accidents resulting in injuries can – and do, happen. It’s always better to be covered and prepared for any accident, however unlikely it may seem.
Myth 5: "I only hire independent contractors, so I don’t need worker’s compensation insurance."
Reality: Matt Zender, Vice President of Underwriting at AmTrust North America, noted this popular myth has caused major damage to small businesses that could have easily been avoided with the proper coverage. “If you hire independent contractors, and you fail to ensure they have workers’ compensation coverage, an injury they may suffer, even a minor one, can come back to haunt you...A workers’ compensation coverage policy, even if you have zero payroll, can be a wise investment to help protect your business,” Zender stated.
Don't forget – remote employees should be covered under your worker's compensation insurance, too.
The moral of the story is…don’t believe the fairy tales! Make sure your clients are secure and protected with workers’ compensation coverage. Take a comprehensive look at the workers’ compensation coverage offered at AmTrust. Not an AmTrust appointed agent? Join our team to Write More Business.