The basic concept behind workers’ compensation is to provide coverage for injuries or illnesses that result from a workplace accident. No fault or negligence needs to be proven. The employer pays for the insurance, and the business is covered for work-related accidents.
This product shouldn’t be overlooked by a self-storage owner if the business has any employees. Mishaps occur, even in the safest and cleanest environments. While you can’t always prevent them, you can be prepared and protected.
There are multiple benefits to workers’ comp insurance. For facility owners, it protects against lawsuits; for employees, it provides medical care and compensation for lost income. The coverage is designed to ensure that those injured or disabled while on the job receive proper recompense, negating the need for lawsuits, regardless of who’s at fault. Additionally, there’s dependent coverage for injured workers or even those who die because of a work-related accident or illness.
Mandatory Coverage
Though workers’ comp is required in nearly every state, the laws and requirements vary. Businesses that meet certain criteria must provide coverage for their employees or they could face fines and other serious consequences.
Many owners go to great lengths to protect their facilities with specialty coverages—property, general liability, flood, earthquake and many others—designed specifically for self-storage. Each coverage and policy is essential in its own way. This is no different for workers’ comp. For example, general-liability coverage has exclusions relating to the injury of an employee. If your jurisdiction requires worker’s comp, these exclusions apply, whether or not you have a policy. Therefore, this very important coverage must be considered a mandatory part of your insurance portfolio.
Who’s Covered?
When considering your workers’ comp needs, the real question lies in determining who qualifies as an employee and needs to be covered. By definition, an employee is someone hired to perform services under the direction and control of another person or company, known as “the employer.” An employer is any person or entity who gives direction to and exercises control over a worker. This means if you hire an independent contractor, he could be considered an employee for purposes of coverage under your policy, even if he’s not technically on your payroll. This is why it’s important to work with an insurance agent who specializes in self-storage and can work with the insurance company on your behalf.
When hiring staff, follow your state’s statutes and purchase adequate insurance to protect your business. When hiring licensed independent contractors or subcontractors, ensure they carry adequate insurance to reduce your liability in the event of a vendor-exposure claim. Hiring friends and family may be an attractive idea since they may be less expensive and you already have a great relationship with them; just make sure you follow the same protocols. Whether it’s a friend, family member or business partner, if someone is injured at the facility, it could become costly and cause hard feelings between all parties.
Financial Impact
The cost of a workers’ comp has many variables. The premium is based on several factors, such as facility location, payroll, class code, experience modifications and number of employees.
Additionally, coverage is an auditable policy, so if you underestimate your payroll, you’ll owe additional premium at the end of the year. If you don’t complete the necessary audit forms, the carrier may create its own calculation, which will probably result in additional cost to your business. On the other hand, if you overestimate your premium, the carrier may apply a credit to the following year’s insurance renewal, reducing the total expense.
Most owners exclude themselves from workers’ comp coverage. This is done for various reasons but primarily because they wouldn’t file this type of claim against themselves. Since the premium is based on annual payroll and number of employees, eliminating the owner can lower the cost. Most owners prefer to use their own healthcare benefits for coverage in the event of an accident or injury, which can save premium dollars.
Finding an Agent
When selecting an agent to help you with insurance coverage, find a carrier who has experienced claims handling. If an employee gets hurt on the job, you want him to recover and get back as quickly as possible. Your business relies on staff showing up to work healthy. The way a claim is handled could impact how soon an employee returns to work. Not only is responsiveness important, you want a carrier who has access to a wide variety of healthcare networks that are experienced in treating on-the-job injuries.
Workers’ comp is a vital, reasonably priced product that should be purchased if you have one or more employees. Talk to your insurance agent to ensure you have the correct coverage in place. Workers’ comp will give you peace of mind while protecting your business and employees.
Melanie Wichelman is an account executive with Universal Insurance Programs, which has created and provided specialized insurance coverages to the self-storage industry for more than 20 years. For more information, call 800.844.2101; visit www.universalinsuranceltd.com.
