The history of workers compensation can be traced back to the late 1800s in Germany. The safety at a lot of the mills or plants were less than optimal and insurance companies at the time saw a need to provide for an employee, in heath benefits and monthly monetary payments, should he be debilitated in some form while on the job. It was not much later, in the 30s and 40s, that this type of insurance become a mainstay in the United States.
Now it is commonplace and even mandatory to have it if you own a business that employs over a certain amount of people.
So what exactly is it? Simply put, workers compensation is a type of insurance that reimburses an employee who has been injured at work for medical costs and loss of wages. When a company carries this form of insurance an injured worker forfeits his right to directly sue a company for the tort, or remedy, of negligence.
Each states has their owns laws regarding this type of insurance but universally this provision provides two benefits. These are a) weekly payments via check to make up for lost time and wages and b) reimbursement or payment of all past, present, and future medical payments for the injury that happened.
This type of insurance is extremely beneficial, especially for higher risk jobs like roofing or commercial fishing, but also extremely expensive. It is one of largest costs of doing business for many companies both large and small. The premiums can be astronomical!
Its not based on a set monthly or annual fee like other forms of insurance but variably based on the salaries you are paying out in $100 increments.
The cost of keeping workers comp for a typical roofing company is $30 per $100 in payroll paid out. For example, lets say that a particular roofing company called "ABC Roofers" paid out $10,000 in salary one month. That same month "ABC Roofers" it would be on the hook for $3,000 to the workers compensation company. That's a lot of money to pay.
As long as you can pass those costs off to a general contractor or customer then it is is not a huge issue. It does however become a problem when some companies do not have it and are able to charge much less. These companies do not last long because all it takes is one accident and they can be personally 100% liable or OSHA can find out and give them enough fines to effectively put them out of business. In the meantime though they underbid jobs and undercut the legitimate competition causing a large amount of headaches.
Workers compensation is not cheap but something every business must have. Its not only the law but a wise thing to do. Even if the type of work your employees are doing is relatively safe you need workers comp.
A worker can slip and fall on a puddle of water or ice and without this insurance a good and experienced personal injury attorney can take you to the cleaners. A simple fall can rob you of your home, cars, personal property, and much more if you do not have workers compensation. Its not worth the risk.
Nobody likes paying the high costs but its one of those necessary evils we have to deal with. Its actually a great provision and one that is absolutely necessary but thousands of phooey claims have brought prices to disproportionate figures. Without it though workers could potentially loose everything from one injury that takes weeks or months to heal from and businesses would have 100% liability for everything if negligence could be proved in court.
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