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Does your business have enough workers’ compensation coverage?

As a small business owner, you have to be cautious about how much money you spend and where you spend it. You know that you have to have workers’ compensation insurance, but when money is tight that insurance may lapse.

A lapse in workers’ compensation insurance might not seem like a big deal, but if one of your employees is harmed during that lapse, you could end up facing serious consequences.

Required workers’ compensation coverage

In New York, you are required to carry workers’ compensation coverage for your employees (though there are a few exceptions). Workers’ compensation is required even if your employees are only working for you part-time or are part of your family.

You can purchase workers’ compensation coverage from a private insurance carrier. You can also get it from a state fund if you’d like. Sometimes, business owners do opt out of workers’ compensation and self-insure, but for a small business, it’s typically easier to purchase state-funded workers’ compensation coverage.

What happens if your business doesn’t carry workers’ compensation or it lapses?

A lapse is basically the same as not having workers’ compensation at all. If you have six or more employees and fail to carry the right insurance coverage, you could be fined between $5,000 and $50,000. You could also face a felony charge.

For smaller businesses with five or fewer employees, the fine is limited to $5,000. However, if this is not the first time that the coverage has lapsed, you could face fines between $10,000 and $50,000 depending on the circumstances.

What can you do to protect your business?

It is possible to protect your business against claims that you weren’t covering the right insurance when an employee was hurt, but you need to work quickly. You’ll need to look into things like the statute of limitations to see if the worker’s injury is still compensable as well as the terms of your insurance to see if there were errors made in the length of the coverage unrelated to missing a payment.

Getting the right workers’ compensation coverage is necessary, so if you’re not yet dealing with a worker’s emergency, it’s time to get that coverage back in place.

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