Don’t Tempt Fate: Buy a Workers’ Comp Policy
Thousands of Texas employers and their employees operate without an important safety net. Texas is the only state allowing private employers to opt out of the workers’ compensation system. And, according to the Texas Department of Insurance, about one-third are “non-subscribers” These employers think they have found a cheap substitute for workers’ compensation in the form of occupational accident (OCC/ACC) policies.
The National Federation of Independent Business/Texas, (NFIB), specializing in protecting the interests of the state’s small-business owners for many years, does not advise our members to choose an OCC/ACC policy over a workers’ compensation policy. The risk is simply too high.
Under Texas law, workers’ compensation benefits are the injured worker’s sole source of recovery from an employer who carries workers’ compensation coverage. That means that in most cases, injured workers cannot sue their employer for pain and suffering damages resulting from workplace injuries. Nonsubscribers do not have the same legal protection, leaving them vulnerable to potentially costly jury verdicts.
In 2006, a Houston construction worker fell 20 feet from a roof and was paralyzed. He sued his employer, claiming the employer did not provide fall protection equipment or safety training. In July 2009, a Harris County district court issued a $20 million verdict in favor of the worker. An OCC/ACC policy would have provided minimal coverage in this situation. The verdict would have been unlikely for an employer with a workers’ compensation policy. For information on laws in your state http://reduceyourworkerscomp.com//workers-compensation-state-laws-and-regulations.php
Setting aside he potential for losing a large lawsuit, workers’ compensation insurance also takes care of your employees if they are injured on the job. Your policy will pay for their related medical expenses and replace a portion of their lost wages, for life if necessary. OCC/ACC policies, on the other hand, typically put a cap on injured workers’ taxable benefits. Furthermore, workers’ compensation wage-replacement benefits are not taxable. OCC/ACC benefits are.
Some employers think OCC/ACC policies are a good option for typical workplace injuries. But what about non-typical injuries? Consider an OCC/ACC policy with a $1 million coverage limit. That’s probably enough to cover the average slip, trip and fall injury. Quadriplegics, paraplegics and other seriously injured workers, however, could blow through that $1 million in a hurry. You could be on the hook for their remaining medical bills, with the potential of approaching the $10 million mark. If the accident involves more than one employee, you’ll reach the $1 million limit even faster.
You might reduce your premiums by choosing an OCC/ACC policy over a workers’ compensation policy, but consider this: Will you have enough money in your budget to cover a catastrophic injury you can’t possibly foresee?
Of course, in business, the bottom line is the bottom line. Fortunately, Texas workers’ comp rates fell 30% between 2003 and 2008, according to the Texas Department of Insurance. Some carriers offer the opportunity for employers to further lower their premium by joining a group discount program and enrolling in a workers’ compensation health care network. (workersxzcompxzkit)
By and large, Texas workplaces are safe. Private employers reported 69,320 nonfatal occupational injuries and illnesses involving days away from work in 2007, according to the U.S. Bureau of Labor Statistics. That’s a 4.6% decrease from the 72,660 reported cases in 2006. Still, no one can predict when a workplace injury will happen or how much it will cost. Workers’ compensation insurance provides a measure of protection that can help ensure a business stays in business.
Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers’ comp issues.
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