The Process of Obtaining a Workers’ Comp Policy for an HVAC Business
Have you recently started an HVAC business, or are you in the process of creating one? Have you crossed checked everything to ensure that your business has the appropriate insurance coverage in the event of an accident?
What about Workers' Compensation? Did you know that HVAC technicians suffer more injuries on the job than workers in other professions?
This is mainly because they work with heavy equipment, electrical wiring, and are often subject to hazardous materials. To best protect your business and your employees, you should consider getting an affordable Workers' Compensation policy.
If you are ready to learn more about this type of insurance coverage, you will want to keep on reading. In this brief Workers' Comp guide, we will go over Workers' Compensation coverage and the process of obtaining a policy.
What Is Workers’ Compensation Insurance?
Worker's Compensation, also known as Workers' Comp, is an insurance policy that provides coverage for costs associated with workplace injuries or illnesses. Accidents can happen in the workplace, and Workers’ Comp can help provide you and your business a safety net to cover these unexpected expenses.
This coverage was designed to ensure that your employees are taken care of if they become sick or injured at work while ensuring that your business could be protected from any legal or financial expenses related to the injury. With Workers' Compensation covering your business and employees, your employees relinquish their right to sue your company if they get hurt on the job.
An exception to this rule is if your business intentionally contributed to the injury or illness. Another exception is if your business' negligence contributed to the employee's sickness or injury.
Does My HVAC Business Need Workers’ Compensation Insurance?
An HVAC company should consider Workers' Compensation insurance for several different reasons. For example, the state your business operates in may require you to carry this type of insurance depending on the number of employees you have.
You shouldn't just get Workers’ Comp because your state requires it; instead, you should consider purchasing it as a precaution. If your employees get hurt, Workers’ Comp can help cover their lost wages and expenses related to an injury.
HVAC Contractor Risks
When your contractors go out to work, they encounter many different risks at the job sites. For example, there is the threat of electrocution from equipment and wiring.
Electrocution
Electrocution can cause internal injuries, burns, or even death. These accidents happen instantaneously without warning, so you want to make sure that you have the appropriate coverages to assist your employees if they get hurt.
Chemical Exposures
Your HVAC employees often work with various chemicals that can cause burns, such as cleaning liquids, gases, solvents, and refrigerants. Of course, as a small business owner, you may want to ensure that your technicians are well trained in how to handle these chemicals, but accidents can still happen.
HVAC Industry Workers’ Comp Coverages
So, what does Workers’ Comp cover for your employees? As mentioned earlier, it can cover your employees' medical care if they get hurt while on the job.
These injuries could come from testing a gas furnace or wiring a new air conditioning unit. Workers' Comp can help pay for medical expenses when this happens.
Disability Coverage
When an employee sustains a severe injury, they may need time to heal before they can return to work. During this time, your employee can lose out on wages they would have had if they had not been injured.
There are four disability classifications:
- Permanent partial disability
- Permanent total disability
- Temporary total disability
- Temporary partial disability
Workers' Compensation can cover the costs associated with the temporary disability, including medical expenses, follow-up medical care, prescription medicine, and any lost wages.
Workers' Comp settlements and rates depend on the type of injury suffered and how the injury affects them. In some cases, an employee may receive a lump sum settlement, and others may receive weekly benefits.
Employer’s Liability Insurance
When you connect with a reputable company for your Workers' Compensation coverage, like PolicySweet®, you have employer's liability insurance as a part of your Workers' Comp policy.
This type of coverage can provide you, the small business owner, protection if someone blames and sues you for an employee illness or injury. Employer's liability insurance can cover legal defense costs when an employee blames your business's negligence for their illness or injury.
Costs associated with legal defense:
- Hiring a lawyer
- Paying a settlement
- Court fees
For example, if one of your employees sues you for an injury caused by faulty tools, your employer's liability insurance could kick in for any legal fees or costs associated with the lawsuit. If your employee believes that your negligence caused their injuries, they could sue you for damages.
Who Is Covered by Workers’ Compensation?
Several factors, such as specific roles and the size of your small business, determine which employees should be covered under your Workers' Comp coverage. As mentioned earlier, the requirements for this coverage vary by state, but most full-time employees have Workers' Comp coverage. In general, if you own an HVAC company, you may want to obtain Workers' Comp for all your employees.
What Is Not Covered Under Workers’ Comp?
Although most workplace injuries or illnesses are covered under your Workers' Compensation coverage, there are a few things that are not covered. For example, if any of your employees are injured outside of work, Workers' Comp will not pay for that. Many employees may try to claim Workers’ Comp when coming to or leaving work, but that is not valid. Coverage depends on the Worker's Comp statute in your state.
Intoxication
If your employee is under the influence at the time of the injury, the intoxication is the sole cause of their injury; the injury is typically not covered. When your employee submits a Workers’ Comp claim, they must pass a drug test to prove that they were not under the influence of any illegal substances or alcohol.
Intentional Act
An intentional act is when your employee purposely hurts themselves while at work. If they intentionally cause an accident for the sake of a Workers' Compensation claim, their claim will most likely receive a denial. Your insurer can complete a thorough investigation to rule out intentional acts.
Workplace Violence
If your employee purposely instigates violence in your workplace and becomes injured, Workers' Compensation will not pay for their injuries. However, if one of your employees is an innocent bystander, their injuries may receive coverage through your Workers' Comp policy.
Who Needs Workers' Compensation?
If you own or operate a small business, you should consider receiving a quote for Workers' Compensation. As mentioned earlier, Workers' Compensation laws vary by location and the industry of your business.
As an HVAC business owner, you will most likely want to purchase Workers' Compensation insurance, especially if you have employees on staff. It is always recommended to check with your state to see if Workers' Compensation coverage is mandatory for your industry.
Most states mandate business owners to obtain Workers’ Comp as soon as they hire their first employee. Some other states do not require this coverage until you have two to four employees. Again, make sure to check in with your state laws to ensure that you are compliant.
Workers’ Compensation Possible Penalties
Depending on the state that you conduct business in, there are a few penalties you should be aware of. If you do not comply with your state's Workers' Compensation rules, you can face severe penalties.
Possible penalties include:
- Felony criminal charges
- Jail time
- Hefty fines and fees
Even if Workers' Compensation is not a requirement in your state, it is still a good idea to get a Workers' Comp policy. You may feel comfortable knowing that you may have adequate coverage against legal and financial expenses associated with work-related injuries when you have this type of policy.
Why is Workers' Comp Important?
Unexpected accidents happen all the time in the workplace, especially with an HVAC business. Should one of your employees sustain an injury or get sick while on the job, your Workers' Comp coverage could help protect you and your business.
Liabilities
Workers' Comp coverage could help protect your business against several different liabilities. For example, if your employee sustains a severe injury that puts them out of work permanently, they could have medical expenses, and they may decide to sue your business.
As mentioned earlier, your Workers' Comp coverage can help pay for those medical expenses and any legal issues with the injury. Without this coverage, your business may have to pay out of pocket for your employee's injuries and lost wages.
Most companies do not have the financial liquidity to cover those serious incidents over an extended period of time. A serious workplace injury could financially damage your business and could lead to possible bankruptcy.
Hiring and Retaining Employees
If you plan on expanding your business by hiring more employees, Workers' Compensation can help recruit new employees. If you already have employees, getting this type of coverage could indicate to them that you value them, and you want them to know that there is coverage in the event that they get hurt while on the job. Being able to take care of your employees could help you to attract and retain your team.
How Much Does Workers’ Compensation Cost?
Every business is unique, and there are several different factors that affect the cost of your policy. No two companies or Workers' Compensation policies are the same.
Previous Claims
If your business has a history of workplace injuries or Workers' Compensation claims, that may affect the price of your Workers' Comp policy. Companies that do not have a history of many workplace injury claims may receive a discount and can enjoy lower premiums. On the other hand, businesses with several workplace injury claims typically have higher premiums.
Workers’ Compensation Class Codes
Each company has different class codes that insurance companies use to estimate the level of risk associated with the work your employees' conduct. Riskier jobs typically have higher premiums, whereas jobs that have minimal risks tend to have lower premiums.
Payroll
The cost of your Workers' Comp policy also depends on the size of your workforce and your annual payroll. It is imperative that you report your payroll as accurately as possible because the amount you declare directly affects your Workers' Comp insurance rate.
Get Your Free No-Obligation Quote Today
When running your HVAC business, the last thing you want to do is pay out of pocket for any legal expenses or your employee's injuries. You already have a lot of moving parts going on when running your business operations.
Your HVAC technicians face a lot of possible workplace hazards that can result in illness and injuries, obtaining a Workers' Compensation policy could help to protect not only your employees but your business as well. Contact us now if you are ready to see your Workers' Comp quote! Our team is fully prepared to answer any questions or concerns you have about your new policy!