Expert answers to all your business insurance questions.
What are workers' comp limits and what do I need to know about them?
- Workers' Comp Basics
A lot of business owners panic when they think about purchasing insurance, because they think they’ll have to make a lot of decisions about financial limits and deductibles.
Luckily, in the case of workers’ comp coverage, that’s just not true.
That’s because workers’ comp limits are set by the state—not by employers or insurance companies.
This means that each state has its own set of limits, which you won’t be able to adjust when you purchase a policy.
What does this mean for you? Basically, it means that you don’t need to worry about workers’ comp limits. At all. You don’t have to make any of those decisions.
All you need to do is provide the most accurate company information you can when you purchase a policy and your employees will automatically get the state’s mandated coverage. Neat, huh?
Now, there is a bit of an exception to this (of course), but it’s pretty minor. It has to do with an obscure policy add-on called Employers Liability. This coverage only takes effect if you ever get sued by a third party over an injury claim (which is a pretty rare instance).
For example, say one of your employees got hurt while working for you and decided to sue the manufacturer of the equipment they were using at the time. Then, let’s say that the manufacturer of the equipment turned around and decided to sue your company for financial damages. That’s when Employers Liability would kick in, protecting your company from financial liability up to a certain limit that you select.
Like we said, this kind of instance is pretty rare, and because of that, Employers Liability is an inexpensive add-on. In fact, it’s so minor and costs so little that many small business insurance online providers will only offer one set of pre-defined limits. (Still no decisions. Hurrah!)