Understanding Workers' Compensation Insurance for Cannabis Businesses
The world of cannabis has so much going on, making it complex and complicated. It is because of this that, out of the seldom-discussed elements, Workers’ Compensation Insurance is the most important among those that are to be considered within the list of requirements.
That protects an injured employee yet maintains the owner’s control over such injury-related costs through management and, therefore, is among the must-have elements of any cannabis business.
Now, let’s get to what workers’ compensation insurance is, why it matters to your business, and how it works.
What is Workers' Compensation Insurance?
It covers one form of insurance that pays for injuries or illnesses caused at work to an employee. Often, their turn will come for the employer to shell out the costs in the form of medical treatment and lost wages if an employee has sustained an injury at work. This can be pretty overwhelming to a business financially.
However, workers’ compensation insurance carries out the burden of paying out all those costs so that the business will not have to shut down because the owner cannot afford to pay such costs.
Workers’ Compensation Insurance basically serves two purposes in essence:
Protection of Employees
As long as they are not liable for worker lawsuits on injury while working, employers do not incur huge out-of-pocket expenses.
Protecting Employers
It simply means that employers will not incur big out-of-pocket losses when protected against lawsuits by workers on injury while at work.
Who Needs Workers' Compensation Insurance?
Being a cannabis business operator, the chances are pretty high that you need workers’ compensation. Here is why:
Employers with Employees
Nearly all states require any company with employees to carry this coverage. It’s the law for your cannabis venture. It doesn’t matter if you have one or a thousand employees. It reaches every employer, regardless of workforce size.
Contractors and Temporary Employees
Most states are required to have workers’ compensation no matter how the worker is classified as a contractor, part-time, or seasonal employee. Of course, this would apply especially in the cannabis industry since these companies tend to hire workers seasonally for the peak production period.
Risk of Injury
One has a high chance of getting hurt simply because operations into cannabis are either cultivation, extraction, or distribution. They will be exposed to heavy machinery, chemicals, and labor-intensive work, all of which raise a demand for people to ensure they have some insurance.
Why Do You Need Workers' Compensation Insurance?
Medical Costs and Lost Wages
Understand the medical costs of injury, like long stays in the hospital, operating costs, and rehabilitation costs, among others. It also includes the replacement of wages if the employee is unable to report to work because of it.
Legal Compliance
Most states require businesses to carry Workers’ Compensation Insurance. Failure to do so will expose you to severe penalties, such as fines, stop-work orders, and possibly even jail time in extreme cases. You would also avoid a wrongful lawsuit against your business.
Protection Against Claims on Lawsuit
While Workers’ Compensation Insurance provides the funds for compensating employees, it also grants exemption from lawsuits by the very same employees when work-related injuries are suffered. This means that usually, employees can never bring any extra damages against their employer after having benefited under Workers’ Compensation benefits.
What is Covered Under Workers' Compensation Insurance?
Knowing what Workers’ Compensation Insurance covers can help you assess your business’s needs better. Here are the primary components:
Medical Expenses
It covers all necessary medical treatments, such as if an employee is injured on the job since this includes hospital stays, surgeries, physical therapy, and rehabilitation.
Lost Wages
Workers’ Compensation Insurance also covers lost wages when the worker is prevented from working because of the injury; typically, these are provided at a manageable share of regular income so that wages can still be paid to meet other obligations.
Rehabilitation Services
Some states offer on-site vocational and psychological rehabilitation services to employees that result from work-related injuries. These will be very helpful in enabling them to recover their skill levels before returning to work more effectively.
Disability Benefits
An injury that causes a long-time disability is covered by the policy with continuous wage replacement benefits. This means that employees will continue supporting themselves and their families while receiving their recovery.
Death Benefits
Under tragic circumstances where the work-related injury leads to an employee’s death, the insurance pays death benefits to the dependents, such as the spouse and children. This benefit helps to somewhat ease the financial burden during this incredibly trying time.
Case Studies for Claims on Workers' Compensation Insurance
Malfunctioned Equipment
Imagine that an employee from one of the extraction facilities of a cannabis processing company gets hurt by malfunctioning equipment when putting it to use. The employee would rack up steep medical bills and lose wages from time lost in the workforce. Workers’ Compensation Insurance would provide cover for medical treatment and wage replacement so that the employee could be cared for while the employer would have a defense against legal claims.
Accident
Picture this: an employee is conducting his route selling cannabis products. An accident occurs, resulting in the employee getting injured and thus being unable to carry out his work. In this case, the Employer’s Liability would address the medical treatment for the injuries and compensation for the loss of wages by the employee during recuperation.
Workplace Safety
Consider, for example, an employee who was injured after he and his fellow employees requested certain old equipment used for extraction to be repaired. If the negligence of the employer can be proven in relation to the failure to maintain the safety of the workplace, then Workers’ Compensation Insurance provides a mode whereby the employer may utilize them to finance claims that come through due to that negligence. This will serve as protection to the employee, and it lessens the financial blow that will necessarily visit the employer.
Frequently Asked Questions About Worker's Compensation
Most cannabis-selling firms require full-time, part-time, or contract workers to have their Workers’ Compensation Insurance. Indeed, most states require it; therefore, if you wish to be on the good side of the law, this should be one of the things that you will require.
Seek a Workers’ Compensation insurance provider that is well versed about the special rules in your state, previously has experience working with cannabis operations, and can deliver all your options of coverage. Also, learn how they process claims so you can have the best support possible in case an employee gets hurt so that you can benefit all that time from protection and help.
That is based on the state, the type of work your employees are doing, and also your claim history. Premiums are designed using a formula that applies to your payroll classification codes and experience modification rate. For instance, you have 100,000 in payroll at a rate of 1.35. That runs to about 1,350 a year, but obviously, in so far as possible, it’s always smart to call the insurance carrier to get an actual quote.
Why Choose AlphaRoot As Your Cannabis Insurance Broker?
That is why you want to have an AlphaRoot knowledgeable broker when it comes to the right Workers’ Compensation Insurance for your cannabis business. We have reasons as follows for you to consider us;
Industry Expertise
AlphaRoot is an insurance solution company specializing in cannabis solutions. We understand your needs quite well, considering the unique challenges and inherent risks you face. This enables us to tailor coverage to meet your specific requirements.
We will take the time to learn about your business and its operations. With a more personalized approach, you can bet to get the best possible coverage options at competitive rates that help protect your employees and bottom line.
Compliance Guidance
It can be a pretty tricky area of law to navigate the requirement for Workers’ Compensation. AlphaRoot gives you insights to help ensure compliance and minimize costly penalties that may derail your otherwise going-well business.
Claims Support
And just in case a claim does advance, our team will be there for you, representing you and explaining each step of the way. We will make sure you are taken care of all the way through to getting you the support you need for your employees.
If you’re ready to have complete Workers’ Compensation coverage for your cannabis company, then come to AlphaRoot today, and we’ll draft an individualized quote for you. Let our experienced team handle the process so you can make sure you have the protection you need.