If you own a business and you have employees on the payroll, you are required to have some kind of worker's compensation insurance in place. This is designed to protect both you and your employees in the event that they become injured or sick as a result of their employment. Here are five important facts all companies need to know about worker's compensation so that they can be prepared if someone needs to file a claim.

1. It Is The Law

Having worker's compensation insurance is a legal requirement in all fifty US states. However, it is important to note that each state's government dictates the specifics of that coverage, not the IRS contrary to what many people believe. There may be a state run worker's compensation plan in place, or you may rely on private insurance. You should get in touch with your individual state's insurance commissioner to find out how to obtain this coverage and to find out more about what rules will apply for your specific state.

2. It Is Designed For Your Protection

If an employee gets hurt while on the job, worker's compensation helps to assist them with the associated health care costs and a part of lost wages as a result. But this insurance is also designed to help protect you, the employer. If you are covered, you are protected from lawsuits and having to shell out excess money to cover the employee's injury related costs. If you did not have this coverage, you could be liable for all of the expenses as well as be open to a civil suit, which can be extremely time consuming and costly.

3. Not Everyone Has To Be Covered

In some states, part time employees and contractors may be exempt from worker's compensation coverage. It is usually mandated, however, for all full time employees.There can also be certain limits to what is covered by the worker's compensation plan, but most plans do assist employees with things like lost wages or benefits for surviving family members in the event of a work-related death,

4. There Are Ways To Save Money

Regardless of the cost, you're required to buy worker's compensation each year. Fortunately, there are some ways you can obtain reduced rates. If your company has a flawless safety record and little to no accidents, you will probably pay less. It can also depend on what industry you are in. Some industries, like construction, are higher risk than others, such as retail. Be sure your business is coded in the right industry. You can also opt to pay a higher deductible, which can reduce your overall premium costs.

5. Be Aware Of Fraud

Sadly, some people do take advantage of the worker's compensation system. The majority of employees who file claims have a legitimate injury or other problem, but some people try to file false or fraudulent claims. When possible, get witnesses to write and sign something stating they saw the accident take place. This can help protect you and the employee from potential fraud. If you do suspect someone who works for you is filing a claim fraudulently, you should inform your HR department and the state's local worker's compensation office immediately.

For further assistance, contact a worker's compensation attorney, such as David Ewens.