The importance of business insurance for employee compensation plans
Workers often face many different risks in the workplace. While these risks vary significantly by industry, any employee who suffers an injury (or death) at the workplace is liable to receive compensation. In preparation for this risk, many businesses prepare compensation packages for their employees. These packages ensure that the business can afford to honor claims made by injured workers. They also prevent businesses from suffering losses as a result of claims that they weren't prepared to pay.
To protect these compensation plans, it's always a good idea to have them insured. Insurance for employee compensation plans is essentially a type of liability insurance. It prevents your business from incurring losses as a result of any errors in your compensation plan. For example, accidentally omitting an employee from the compensation plan may prove costly if they end up injured at the workplace. Such administrative errors can be covered by this insurance plan.
Here are other benefits of obtaining insurance for employee compensation plans.
Protection against fraud and errors
In cases where your compensation plan processes an erroneous or fraudulent claim, insurance can compensate you for the fraudulent payments that were made to an employee/employees. Indeed, there is the risk of an incorrect claim for compensation being made when an incident occurs in the workplace. If you end up finding out about such an error after payment has already been made, you can seek reimbursement for the damages.
Prevents your operations from being affected by costly claims
Workers who experience a significant injury or death in the workplace will often require significant compensation. Medical bills or benefits paid to their next of kin can prove quite costly to your business. If your compensation plan wasn't prepared to handle such a high claim, insurance coverage can help. You can set certain limits for coverage in the event that you have to honor a costly claim from an employee's injury.
Shields you from legal liability
Most employment laws around the country cover employees against workplace injuries. As the employer, you often have to ensure that your workers have a safe environment and will receive compensation in the event that an injury occurs. By insuring your workers' compensation plan, you'll be in the best position to honor all valid claims made by injured employees. This, in turn, keeps you legally compliant and prevents costly lawsuits that may be filed by your employees.
Makes management of varying compensation packages easier
If you have seasonal or high turnover employees, it can prove hectic to manage all their compensation plans effectively. Errors, fraud and omissions are usually more likely in such situations. With insurance coverage, you can ensure that all employees (temporary or permanent) will be compensated if they suffer an injury while working on your premises. For more information, contact your local compensation lawyers.