Any business with employees should anticipate legal claims from its workers. The best way to protect your business from such claims is to buy relevant insurance coverage. That way, your business won’t have to incur legal or compensation costs in case of a claim. Below are three basic forms of insurance to protect you against employee claims.
1. Workers’ Compensation Insurance
Workers’ compensation insurance compensates employees who suffer injuries when involved in work-related activities. That way, you don’t have to face claims or lawsuits from the employees. Workers’ compensation laws are state-dependent. For example, in Georgia, most employers with at least three employees, whether full or part-time, need workers’ compensation insurance.
Workers compensation benefits include:
- Medical payments
- Income benefits
- Rehabilitation costs
Workers’ compensation also pays death benefits if an employee suffers a fatal injury or illness from work-related activities. The deceased’s financial dependents, usually the spouse and kids, are entitled to the death benefits.
The National Council for Compensation Insurance (NCCI) determines premiums for workers’ compensation insurance. Factors that determine your rate include:
- The nature of your business; dangerous businesses attract higher rates than safe businesses
- Your annual payroll
- The number of employees
- Your business experience and claims history
Maintain a safe workplace for your employees to reduce the risk of injuries, establish a clean claims history, and enjoy low premiums.
2. Employer’s Liability Insurance
Workers’ compensation insurance applies irrespective of liability. However, if an employer is responsible for an employee’s injury, the employee can sue the employer directly for damages. In such a case, the employer’s liability insurance shields you from the employee’s claim.
Consider a case where an employee suffers an injury due to poor equipment maintenance. The employee can sue you for damages since you are responsible for providing safe tools and equipment at your workplace. If that happens, the employer’s liability insurance may come to your rescue.
Employer’s liability coverage protects you from various forms of liability claims and not just employee claims. The coverage may also shield you from:
- Loss of consortium claims from family members of injured employees
- Claims from consequential bodily injury; for example, if an employee picks up an illness in the workplace and spreads it to their loved ones
Below are some factors that determine rates for employer’s liability insurance:
- Workers compensation claims history
- Nature or risk of business
- Number of employees
You can view employer’s liability insurance as a subset of workers’ compensation insurance. Thus, you can enjoy lower rates if you control your workers’ compensation rates.
3. Employment Practices Liability
Employers’ practices liability insurance (EPLI) protects you from employees who claim that you have violated their rights as your employees. For example, EPLI coverage may apply if an employee accuses your business of:
- Wrongful termination
- Breach of employment contract
- Mismanagement of employee benefit plans
You can buy the coverage as part of your business owner’s policy, endorsement, or standalone coverage.
Like other forms of business insurance, premiums for EPLI depend on various factors. Below are some of them:
- The type of business and its potential risks
- The number of employees
- Claims history
The best way to manage EPLI costs is to minimize related claims. You do this by creating an environment that minimizes employment-related grievances from your employees. For example, you need fair and clear hiring, retention, and promotion policies to minimize discrimination and wrongful dismissal claims.
An experienced insurance agent can help you review your insurance needs and purchase relevant and affordable coverage. Kenneth Rhodes & Associates Inc has over 25 years of experience in the insurance industry. You can rely on our knowledgeable staff to help you get the coverage you need. Contact us for a quote for all your business insurance needs.