As a business owner, you probably know how important it is to provide benefits to your employees. Sometimes an employee will be more inclined to work for you if you offer more benefits over another employer. Most states already require you to offer Workers Compensation insurance, which will provide coverage for medical expenses should an employee become injured or obtain an illness while on the job. However, what happens if they are hurt or fall ill outside of work, but are still unable to work? Here is where disability comes in. Regardless of whether you are a small business with only ten employees or a large one with over 100, it is beneficial to both you and your employees to have both of these policies.
With Workers Compensation insurance, your employees will receive money for medical expenses and lost wages if they should get hurt or ill on the job. For example, if they were operating machinery and damaged severely, or even if it is a simple slip and fall and they twist their ankle. Both of these situations, even though they vary in severity, will require medical treatment and possible time missed from work. Workers Compensation often offers accidental death and funeral benefits as well. Benefits from Workers Compensation will only be paid until the employee is back to work, or in the worst case scenario permanently disabled. Lastly, the benefits paid to the employee are not taxable.
Disability is helpful in that it provides an income for your employee for the time they miss from work. Now, this will be due to injuries or illnesses obtained outside of work, except in the cases where you are disputing that an injury happened at work. Most of the time, the state will step in and pay benefits to the employee until the dispute is resolved. Additionally, disability can help supplement any income that is lost by the inability to work due to illness or injury. It is important to note that if it is found to be a Workers Compensation covered claim, they will have to pay back the money they received. It is also important to note that these benefits are taxed. If an employee is injured or becomes ill and it is a Workers Compensation claim, but it is so severe that they become permanently disabled, Disability insurance would then take over paying benefits.
Your General Liability insurance policy is going to be the first to respond in the event of a liability claim. The Umbrella policy will then be excess. You can't have the Umbrella policy respond without the GL policy, so they go hand in hand.
Both Workers Compensation and Disability insurance are there to help pay for your employee's lost wages. Each state has different rules and regulations, but often the benefits will only be paid until the employee can return to work. Sometimes partial benefits can be paid if they can do a job, even if not their normal job. As a business owner, you probably already have Workers Compensation coverage. If you don't have Disability insurance and are considering it, talk to an independent insurance agent. They will be able to assess your business and the amount of risk you and your employees have.