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5 common myths about workers' compensation insurance

By Matt Zender

5 common myths about workers’ compensation insurance
(Photo by Getty Images)

Small business insurance, and more specifically, workers’ compensation insurance, is an absolute necessity for any business. For many owners, workers’ compensation insurance programs are insufficient, or worse, non-existent — simply because they believe long-held falsehoods about workers’ compensation insurance.

Clients’ beliefs in these myths can have a major impact on the success of your agency — and like a domino effect — may impact the overall quality and success of your business. Many small business insurance agents would agree, if a company’s workers’ compensation program is sub-par, the weakness can leave a business vulnerable to potential risks and financial disasters — ones that are avoidable with the proper program.

Small business owners may convince themselves that they don’t need the added expense of workers’ comp. They might think that an injury could never happen at their company, and even if it did, they would pay out of pocket — which could be far more financially damaging then they realized. Let’s see if we can dispel these myths, once and for all.

In no particular order, here are the most widely-believed workers’ compensation insurance myths.

Myth No. 1:

"I only have a handful of employees, or, I employ mostly part-time employees, so I don't have to carry workers' compensation insurance."


If a company employs more than one person, having workers' compensation insurance in mandatory. The expenses from job-related injuries, including medical expenses and lost wages, can pile up fast. Also, companies who choose not to have workers' compensation insurance, but are required to carry it, can run the risk of heavy penalties and fines. Having the right workers' compensation insurance program in place will protect the business on all sides.

Myth No. 2:

"My employees are like family, they would never sue me!"


Without a workers' compensation policy in force, damages for injuries incurred at work can soar past thousands of dollars and into the millions. Without adequate coverage, employers leave themselves open to punitive damages, and pain and suffering suits, in addition to astronomical medical bills.

Myth No. 3

"Workers' compensation insurance is too expensive. If one of my employees is injured, I'll just pay out of pocket."


As noted earlier, in most states, workers' compensation insurance is compulsory for a company with more than one employee. If you compare the cost of a workers' compensation policy with the potential cost of a lawsuit, it just makes sense to be proactive with the proper coverage, as out-of-pocket expenses that would be covered by a workers' compensation policy- From lost wages to medical - can bring major losses to a company.

Myth No. 4

"I provide a safe workplace. My employees will not get injured."


Even in the most careful and safest work environments, accidents resulting in injuries can - and do- happen. It's always better to be covered and prepared for any accident, however unlikely it may seem.

Myth No. 5

"I only hire independent contractors, so I don't need workers' compensation insurance."


This popular myth has caused damage to small businesses that could have easily been avoided with proper coverage. If you hire independent contractors, and you fail to ensure they have workers' compensation coverage, an injury they suffer, even a minor one, can come back to haunt you. A workers' compensation coverage policy, even if you have zero payrolls, can be a wise investment to help protect your business. Don't forget - remote employees should be covered under your workers' compensation insurance, too.


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