Workers compensation coverage helps to protect companies from the financial liabilities they would face if an employee suffered a covered work-related injury or illness. In general, workers compensation policies provide compensation for an injured or ill employee’s medical costs and lost wages.
Almost all Massachusetts businesses that have employees are required by state law to have workers compensation insurance. If a limited liability company (LLC), limited liability partnership (LLP), unincorporated business, or sole proprietorship doesn’t have employees, the business might not have to purchase a workers compensation policy. The business can, however, elect to provide workers compensation coverage to the business’ owners.
Workers compensation policies usually cover employees. Employees typically receive a W2 to file with their personal tax returns. Employees are usually covered regardless of whether they work part time or full time.
As mentioned, a policy may also cover an owner or partner of a business, if the business chooses to purchase a policy that provides coverage for owners and partners.
In a few rare cases, workers compensation policies also provide coverage for subcontractors, who aren’t employees. These situations are uncommon, though, and most subcontractors are responsible for providing their own insurance (subcontractors often receive a 1099, and they don’t get a W2.)
Workers compensation rates are determined by many different factors. Some of the considerations that impact how much a business pays for coverage include:
Many workers compensation policies require employees to waive their right to file a lawsuit over their work-related injury or illness when they make a workers compensation claim. An employee’s right to seek damages through litigation isn’t waived in all circumstances, though. Thus, a workers compensation policy may prevent many lawsuits, but it usually won’t fully protect a business from all possible injury and illness-related lawsuits.
Every year, there are tens of thousands of work-related accidents and illnesses. Many of them being severe and require hospitalization, and a staggering number are fatal. When an employee suffers a work-related injury or illness, their employer is often held responsible for the resulting medical and other financial costs. For many businesses in Massachusetts, being held responsible for these costs would be devastating. Workers compensation insurance protects businesses against these potential liabilities
Massachusetts doesn’t have a state-run workers compensation fund, so policies are purchased on the open market. Independent insurance agents can help businesses in the state navigate the open market and select a workers compensation insurance policy that meets their needs.