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What you need to know about this important insurance policy
Workers' compensation provides financial assistance in the event of a work-related injury or illness. It's not a tax; it's as an insurance policy with an annual premium – and must be managed by a state-licensed insurance broker. In many states, household employers are required to carry a policy. In others, it's optional. However, we recommend that all household employers obtain a workers' comp policy. Here's why.
Families who don't have workers' compensation insurance coverage have significant exposure if there is ever a workplace injury because employers are generally liable for the amount of the workers' comp benefits – meaning they would have to come out of pocket for the employee's lost wages and medical expenses. A significant accident could be financially devastating. Here is a real-life case:
A nanny sustained a back injury in a car accident while grocery shopping for her employer. She was unable to work for 12 weeks and her surgery and rehab expenses totaled about $15,000. Based on her average weekly wage and the medical expenses, the workers' compensation benefits would have been approximately $18,000. However, because they didn't have a policy, the family was forced to pay those benefits.
In addition to financial liability, in states where workers' compensation is required, there are substantial fines for non-compliance. Finally, workers' compensation insurance provides legal protection because employees who accept benefits generally forfeit their right to sue the employer – regardless of fault.
Each state has different workers' compensation regulations. For the requirements in your state, click here.
The good news is, we can provide a workers’ compensation solution for the vast majority of our clients. Depending on what type of household employee you plan to hire and what state you live in, our exclusive partner can write a stand-alone workers’ compensation policy. The policy is competitively priced and conveniently available to our clients during the setup process.
Like any insurance, workers' compensation isn't needed very often. But when it is, it's worth its weight in gold.
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