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Having a workers compensation certificate of insurance is vital for any business with full-time employees, no matter how big or small. It provides essential protection for employees and employers alike in the event of an injury or illness related to the workplace.
So, by having a certificate of insurance, businesses can be assured that their employees will receive the necessary medical care, lost wages, and other benefits if they are injured or become ill on the job. Additionally, employers can protect themselves from costly lawsuits and other liabilities should an employee become injured or ill in the workplace.
With all of these benefits, it is clear why businesses need to obtain a workers’ compensation certificate of insurance.
To help you further understand the importance of this document, we’ll talk about the significance of workers’ compensation and why companies require a certificate of insurance, then you can visit https://cerity.com/what-is-a-certificate-of-insurance-and-why-do-i-need-one/ for more information.
What Is a Certificate of Insurance?
A workers’ compensation certificate of insurance acts as an official policy record and provides proof of coverage for suppliers, lenders, officials, and other interested parties.
It outlines the limits of your workers compensation insurance policy and provides important details such as the name of the policyholder, the policy number, the policy effective date, the policy expiration date, and the limits of the coverage.
It shows that a business is compliant with state laws and regulations, thus helping businesses avoid costly penalties and legal action from state regulatory bodies. That said, the document is often updated regularly to reflect any changes in the policy limits or endorsements so that the business remains in compliance with state regulations.
What Are the Benefits of a Workers Compensation Certificate Of Insurance?
Having a Workers Compensation Certificate of Insurance can provide a variety of benefits to employers, including:
Protection Against Financial Loss
A Workers Compensation COI will help protect employers from costly claims and legal fees. This document shows that employers are meeting their obligations to provide workers compensation insurance, thus shielding them from any potential financial losses due to workers’ compensation claims.
Avoids Penalties
Without a Workers Compensation COI, employers could face stiff penalties from state or federal agencies for failing to provide their employees with adequate coverage. A COI helps protect employers from these types of fines.
Establishes Credibility
A COI also establishes credibility with customers and vendors who may be wary of doing business with an uninsured employer. Having this document in hand serves as proof that the company is operating legally and responsibly.
It Is a Requirement
In most states, it is required by law for employers to obtain a Workers Compensation COI before hiring any employees. Not only will failing to do so result in hefty fines and other punishments, but it could also put your business at risk of lawsuits if anything happens to one of your employees while on the job.
Quick Access to Information
Having a Workers Compensation makes it easier to access key information about your workers compensation insurance policy should you need it in case of a claim. As long as you have the documentation, you will easily find all pertinent details, such as policy limits, employee classifications, premiums, and contact information.
Reduces Employer Liability
It shields employers from liability for injury or illness sustained during work hours. As long as employers are up to date with all payments associated with their policies, they can rest easy knowing that they won’t be held liable should something happen to one of their workers.
Peace of Mind
A COI can give employers peace of mind by providing their employees with proper insurance coverage in an accident or injury. It can help ensure that all parties involved are taken care of in the case of an incident.
Who Needs a Workers' Compensation Certificate?
All employers who hire employees must carry workers’ compensation insurance. Depending on the type of business and its location, some states may require companies to carry additional coverage beyond what’s provided by a standard policy
Businesses must have workers’ compensation coverage when they employ three or more people, even if those individuals are part-time or seasonal.
Nonprofit organizations typically require workers’ compensation insurance regardless of how many people they employ. Companies classified as “hazardous” (such as those in manufacturing or construction) may also be required to purchase additional coverage to comply with certain safety regulations.
The COI includes details about the coverage limits, which types of claims are covered, and who the policy covers. Specifically, a COI covers:
- Employees: A workers’ compensation policy covers employees injured or suffering from job-related illnesses or conditions.
- Subcontractors and independent contractors: Depending on the state, these individuals may be required to have their own workers’ compensation policy or be covered under the employer’s policy.
- Volunteers: Volunteers may sometimes be covered under the employer’s policy.
- Non-employees: Certain non-employees, such as leased employees, directors, board members, or partners, may also be covered under the employer’s policy.
- Medical bills: Injured workers’ medical bills are usually covered, regardless of fault.
- Rehabilitation expenses: Injured workers can receive reimbursement for rehabilitation expenses such as physical therapy, occupational therapy, and vocational training.
- Lost wages: Workers’ wages may be partially or fully covered while they cannot work due to injury or illness.
- Death benefits: In the case of death, the surviving family may receive a lump sum payment to cover burial costs and other expenses.
How Much Does Workers Compensation Cost?
It varies greatly depending on the size and type of business, the type of coverage, and the state where the business is located. Generally speaking, employers are responsible for paying a certain percentage of their employee’s wages to cover workers’ compensation costs.
The average employer pays around 1.5% of their payroll for workers’ compensation insurance. However, certain industries, such as construction or logging, may pay much higher rates depending on the risk level associated with the job. Additionally, certain states may have higher or lower workers’ compensation rates than others.
In Conclusion
A Workers’ Compensation Certificate of Insurance is a valuable document that can protect your business from liability and costly lawsuits. As such, you must make sure that your COI is up-to-date and valid to ensure that your business and employees are properly protected.
If you don’t have a COI yet you have an active workers compensation insurance policy, reach out to your provider to provide you with a valid certificate.
