A Small Business Owner’s Guide To Workers’ Compensation Insurance

Workplace safety should be a top priority for any type of business. Injuries, such as slips and falls, can be devastating to your workforce and cause an employee to have a permanent disability or worse. Just in 2018, there were more than two million workplace injuries or illnesses, according to the Bureau of Labor Statistics.

Employers have been paying premiums for workers’ compensation insurance to help protect their financial interests and allow injured workers to receive fair payment.

Workers’ compensation operates differently in each state. In South Dakota, small businesses must understand the laws and procedures associated with workplace injuries. Here is a guide to workers’ compensation insurance for small business owners.

How It Works 

Early in the 20th century, workplace injuries became a hot topic. Some injuries were due to a company’s negligence and workers needed a way to get compensation once they were unable to work. The concept of a workers comp policy started to evolve. Workers’ compensation is an insurance policy that an employer pays out so that workers get compensation and medical benefits if they get hurt on the job. Employees who opt to receive the benefits from a workers’ compensation insurance policy cannot file a lawsuit against the business.

Today, many states require employers to pay workers’ compensation insurance premiums to protect their employees. Then, if someone on the payroll gets injured, they can file a claim for benefits and receive payment. Depending on the state, the benefits may include wage replacement, medical expenses, hospital treatment, physical therapies, medication, and more. Some workers’ compensation policies may also pay out death benefits to the family if the employee’s injury results in death.

South Dakota Coverage 

Businesses that operate in South Dakota are not required to carry workers’ comp insurance. Most experts, however, do recommend that companies have their own workers’ compensation policy to protect the business’ financial future. Without any insurance coverage for injured workers, a company leaves itself vulnerable to civil lawsuits from injured workers. An employee could take a small business to court and get a massive payout, which could financially decimate the tiny company. Instead, the business can pay a nominal premium to get comprehensive coverage in workers comp.

Once someone makes a claim, the type of benefits may vary depending on the injury or illness and the severity of it. In South Dakota, claims can be made for temporary total disability benefits, permanent total disability benefits, permanent partial disability benefits, and death benefits. The amount of money paid each week is set by the state and dependent on the employee’s regular wage. The minimum weekly benefit is $467 and the highest weekly benefit is $934.

Finding Workers Compensation Insurance in South Dakota

In some states, companies can only buy workers comp insurance from a state program and pay a set rate. South Dakota businesses can find their own coverage from a commercial insurance provider or they can apply to pay out the benefits themselves with self-insurance. They can search for workers’ compensation quotes in South Dakota to find companies that provide insurance policies for this region. The average premium cost for a claim is about $40,000, according to statistics from the National Safety Council. 

Instead of covering the claims, businesses can opt to cover their insurance policy premiums for workers’ compensation. Premiums may be higher for businesses in high-risk industries, such as construction, landscaping, and foodservice. Additionally, larger employers may also pay more in insurance premiums because of more workers.

Injury Claims in South Dakota 

Once a small business has a work comp policy in place, the claim process may be used if there is a workplace injury. Employees who are injured at work must notify the employer of the injury within three business days. This notification of the injury should be written down in a report within that time frame. Then, the employer must file their own injury report form within seven days and send it to their insurance company.

Failing to report a workplace injury could result in criminal charges and a $100 fine in the state of South Dakota. In the injury report form, the employer must record details about the injury and how it happened. Information about the part of the body that was injured must also be present on the form. The employer must investigate whether or not the right safety equipment was used during the injury as well. Details about the employee and the medical treatment should also be included on the injury report form.

Temporary Total Disability 

After getting injured, workers can get temporary total disability benefits if they aren’t able to return to work for at least seven days. This benefit is equal to about 2/3 of the worker’s average weekly pay but not to exceed the state’s maximum weekly benefit. In addition to the wage replacement benefit, the worker is also entitled to all medical expenses needed for treatment. Some other expenses may also be covered along with the lost wages and medical care. If the treatment needed is in a different geographic area, the insurance company may also pay benefits for mileage, meals, and lodging.

Permanent Partial Disability

At some point, the goal is for the employee to return to work after healing from the injury and feeling better. In some cases, this is not possible and the worker can only return to light duty or a lower-paying position. If this is the case, the employee may qualify for permanent partial disability and receive benefits to cover lost wages from the pay difference in the new assignment versus the old one prior to the injury.   

Permanent Total Disability

Another type of benefit that a worker could be entitled to after an injury is a permanent total disability. If the injury is significant the employee cannot return to work, this type of benefit may apply. The insurance company may pay out permanent benefits to the worker or offer a settlement. The company will use a formula that follows the state’s regulations for permanent disability and also consider the individual’s impairment rating from the medical provider. Some workers can’t return to their position and must be retrained for a new career. The insurance policy may pay out benefits to assist the worker in job retraining.

Death Benefits

Tragic workplace accidents that result in a worker’s death are also covered in workers’ compensation insurance policies. After the death of an employee in a workplace accident, the surviving family members, such as the spouse or children, may be entitled to benefits. The state requires that the surviving spouse be paid 66.67 percent of the weekly wages. The children may also get benefits until they turn 18. Burial costs of up to $10,000 may also be covered. 

Choosing Medical Care

Workers are entitled to choose their own doctors and medical team for the treatment of work-related injuries. To maintain their benefits and get their medical expenses covered, they must choose a practitioner to deliver treatment. If they decide to change to another provider, employees must get written permission from the employer. Both the employer and employee also have a right to get a second opinion from another provider.

Avoiding Scams

One of the biggest problems that some employers worry about is an employee submitting a fraudulent claim. There have been some cases of workers suffering an injury away from the workplace and trying to claim workers’ compensation for it. That’s why it’s essential to do a thorough written report and investigation of any workplace injury. If there is ever any suspicion of fraud or a scam, the employer should let their insurance company know so it can be investigated.

Providing a Safer Workplace in South Dakota

Employers in the South Dakota area must aim to create safer workplaces for their staff members. Safer workplaces are more pleasant and productive and can help improve the bottom line. Many insurance providers offer incentives to small businesses that prioritize safety in their facilities. Some companies may qualify for a merit-based discount that offers lower premiums for companies with little or no claims in the last three years. Additionally, some companies may get a discount based on a limited dollar amount of their claims.

Another option for some businesses is to consult their insurance provider for safety tips to help qualify for premium discounts. Workers comp insurance providers may have suggestions and best practices to help small business operators go above and beyond with safety. It’s beneficial to make sure all employees have access to top-level safety training for any type of equipment, vehicles, or products the business offers. 

South Dakota Workers Compensation Insurance

Additionally, employees must also know how to use personal protective equipment for different jobs around the facility. The company may also want to improve its signage and labeling to ensure all employees are aware of potential hazards.  Finally, rewards for committing to safety may also be a great incentive to the workforce in a small business setting.

Looking for a worker’s compensation insurance policy provider in South Dakota? Get a custom quote from Meyer Insurance. Learn how you can protect your company from civil lawsuits from workplace injuries and improve your business model for safety.