What Happens if One of My Small Business's Employees Gets Injured on the Job?

(Find out which coverage you need to protect against employee lawsuits)
Christine Lacagnina Written by Christine Lacagnina
Christine Lacagnina
Written by Christine Lacagnina

Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.

paul martin Reviewed by Paul Martin
paul martin
Reviewed by Paul Martin

Paul Martin is the Director of Education and Development for Myron Steves, one of the largest, most respected insurance wholesalers in the southern U.S.

Small Business Workers Comp

When you’re a responsible business owner, it doesn’t matter how large or small your company is, the health and safety of your team is one of your top priorities. Or at least, it should be. However, if your business is so small it’s not even legally required to have workers’ compensation insurance, what happens if one of your employees gets injured on the job? Can they still sue you?

For questions like these, it’s important to hear the answers straight from the real pros, aka independent insurance agents. Ask agents anything. They have the answers. Here’s what they’d say about what coverage you’d need to protect your employees from injury as a small business, and what would happen if one of them decided to press charges.

What if One of My Employees Gets Injured on the Job?

First off, your workers’ comp coverage would kick in. Workers’ comp protects businesses in multiple ways. Coverage takes care of medical payments and treatment of injured or ill employees, so your business doesn’t have to pay for these expenses out of pocket. Also, workers’ comp protects your business from a legal standpoint, so your injured or ill employee cannot sue you if they were hurt while doing their job.

What if I Don’t Have Workers’ Compensation Because it’s Not Legally Required for My Small Business?

If your business is so small that it’s below the state minimum requirements to have workers’ comp coverage, there is another option. To help protect your business from a legal standpoint, you can purchase employer’s liability insurance, which is also known as employment practices liability insurance (EPLI). You can buy this coverage to protect you no matter how small your business is.

Some businesses or employees just don’t qualify for workers’ comp. For example, if you run a business that has several employees and you have workers’ comp to cover them, that’s great, but if you have another worker who helps you, like a maid, they don’t qualify for coverage. There are several interesting exclusions like this. Make sure to talk to your independent insurance agent about how to protect your business and workers, no matter how small your company is.

What Does Workers’ Compensation Cover?

In a nutshell, workers’ comp covers your business from a legal standpoint if one of your team members gets injured or ill, develops a disability, or dies while on the job. Coverage also applies to incidents that happen while an employee is traveling between jobsites or doing job tasks away from the office. Injuries, etc., sustained from using workplace equipment or materials is also covered.

Workers’ compensation insurance covers the following:

  • Employee wages: Workers’ comp provides reimbursement of hourly or salary wages that an employee loses while out of work due to workplace injury, illness, or disability.
  • Legal protection: If a deceased employee’s family sues the business, workers’ comp offers protection by covering attorney and court fees, as well as settlements the business may be ordered to pay.
  • Medical care: Workers’ comp reimburses employers for medical care of their employees, including doctors’ office and hospital visits, rehabilitation treatment, medications, diagnosis fees, long-term treatments, and more.
  • Benefits: In the event of a disability or death of an employee, workers’ comp may pay out a lump sum benefit. If the employee was killed, the benefit would be paid to their dependents.
  • Funeral costs: If an employee dies on the job, workers’ comp may provide reimbursement for final arrangements and ceremonies.

Other incidents that can injure your employees, like workplace violence, natural disasters, and terrorist attacks are also covered under workers’ comp. Your independent insurance agent can help get your business equipped with all the coverage you need to protect your team.

Can an Employee Sue Me if I Have Workers’ Compensation?

It may be relieving to hear that, no, an employee can’t sue you if you have workers’ comp. Having this insurance means your employees have waived their right to sue your business, even if they get injured, ill, etc. on the job. Additionally, even if the employee’s workers’ comp claim gets denied, they still cannot sue you. Protecting against employee lawsuits is one of the main reasons businesses purchase this coverage in the first place.

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What if I Don’t Have Workers’ Compensation?

In that case yes, your employee could sue you for a workplace incident. That’s why having some form of coverage to legally protect your company against employee injuries, etc., is so critical. But workers’ comp isn’t your only option for defense. Again, if your company is too small or some of your workers otherwise don’t qualify for this type of insurance, you can always look into an EPLI policy with your independent insurance agent.

What Does Employment Practices Liability Insurance Cover?

EPLI is designed to cover business against lawsuits filed by your employees stating that their rights have been violated in some way. This coverage is sometimes offered as an endorsement or add-on to businessowners policies (BOP insurance), but it can also be bought by itself.

EPLI protects businesses against the following employee claims:

  • Discrimination
  • Wrongful termination
  • Sexual harassment
  • Wrongful evaluation
  • Wrongful discipline
  • Breach of contract
  • Denial of promotion

This list is not exhaustive. Clearly, EPLI can protect your small business against lawsuits filed by employees not only for injury or illness, but many other claims of distress as well. EPLI is often used to defend companies against fatality claims made by a deceased employee’s family accusing the business of negligence. Your independent insurance agent can help you decide if your business would benefit from an EPLI policy.

What Else Does My BOP Cover?

Boiled down, a BOP is a package of coverages designed to meet the needs of all business owners with its basic core of coverages. Additional coverages can be purchased to finish off your BOP in a way that suits your unique business’s needs.

Core coverages in a BOP include:

  • Commercial general liability: This covers your business against property damage or bodily injury claims made by a third party.
  • Property damage: This covers loss of/damage to your physical property, including your office/storefront and inventory from hazards like fires, storms, vandalism, etc.
  • Business income: This covers financial losses suffered while a business is closed due to fire damage or other disasters.

Working together with your independent insurance agent is the best way to ensure that your small business gets equipped with a BOP that addresses all risk areas specific to your company.

Other Common Risks Worth Considering Coverage for as a Small Business

Beyond just your hardworking team of employees, you need to consider all other areas where your small business needs important protection. You might need to add more coverages on top of your BOP in order to achieve this. The following types of coverage are commonly added on to BOPs:

  • Cyber liability: This covers data breaches and other attacks a business suffers at the hands of cybercriminals. Coverage is becoming increasingly important for modern businesses.
  • Crime insurance: This covers losses due to criminal activity such as theft or fraud. Coverage also applies to employees who steal from the company.
  • Professional liability: This covers claims made by clients who have suffered financial loss due to the work they've hired you for. Lawyers and consultants, for example, typically need this coverage.
  • Boiler & machinery: This covers electric equipment in the building (e.g., AC units and boilers) that breaks down due to power surges, etc.

Your independent insurance agent will work with you to help fill in any gaps in your coverage for your small business.

Here’s How an Independent Insurance Agent Would Help

When it comes to protecting your small business against employee injuries and lawsuits and everything else, no one’s better equipped to help than an independent insurance agent. Independent insurance agents search through multiple carriers to find providers who specialize in BOP insurance and workers’ compensation, deliver quotes from a number of different sources, and help you walk through them all to find the best blend of coverage and cost.

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