Workers’ compensation imburses an employee for lost wages, medical expenses and rehabilitation costs when they are injured or fall ill in the course and scope of their job. If the employee dies under the same circumstances, their family may also file a workers’ comp claim. In consideration of the payout, the claimant relinquishes their right to sue the employer for negligence.

Employees typically file for workers’ comp for unremarkable reasons. It is easy to imagine a situation in which a roofer breaks their leg, or a line cook fractures their elbow after slipping and falling in a kitchen. Employees may also file for workers’ comp after gradually developing a workplace-related injury or illness. Mesothelioma, a disease which typically develops after long-term exposure to asbestos, is a well-known example.

Examples Where Worker’s Compensation Has Been Used

But employees may also file workers’ comp claims for injuries that can only be described as bizarre. Consider these real-life cases:

• A pizza delivery driver who was stabbed while removing a panhandler from their place of work
• A store clerk who fractured their hip while trying to knock a bag of chips loose from a vending machine
• A department store decorator who broke their wrist after tripping over their own dog – while working from home

What do these workers’ comp claims share in common? All three claimants were awarded payouts for their injuries. It only goes to show that an employer never really can tell when they will need their workers’ comp insurance!

What Is Workers’ Compensation Insurance?

A workers’ comp plan insures a business in the event that one of its employees files a workers’ comp claim against it. 

When you purchase a workers’ comp plan, your insurance provider calculates your premium based on a number of factors pertaining to your business, including its payroll, type of work, risk exposure and number of employees. In the event an employee sustains a workplace-related injury or illness and successfully files a workers’ comp claim, the insurance provider pays the employee instead of your business.

How Much Does Workers Compensation Pay Out?

The amount your insurance provider pays to a claimant also depends on several factors, including the state where you do business. As of July 1st, 2022 in South Dakota, the minimum weekly workers’ comp rate is $488; the maximum is $975. Furthermore, workers’ comp insurance pays the claimant $0.51 for every mile they drive to and from medical appointments, and also reimburses them for meals.

The national average for all workers’ comp claims in 2019 and 2020 combined was $41,353. Workers’ comp claims for certain types of injuries are even higher. For example, injuries resulting from car accidents average $85,311.

Are You Required to Purchase Workers’ Compensation Insurance?

The majority of states require businesses to purchase workers’ comp insurance. South Dakota is not one of them. In other words, if you only do business in South Dakota, you are not legally obligated to purchase workers’ comp insurance.

But make no mistake: just because your business isn’t required to have workers’ comp insurance does not mean it is exempt from workers’ comp claims. Any employee may sue their employer for a illness or injury they sustained at their place of work. If civil court rules an uninsured employer is liable for an employee’s expenses and lost wages, their out-of-pocket costs may prove great enough to put them out of business.

If you are a business owner in the greater Sioux Falls, SD area, purchasing a workers’ comp plan is inseparable from protecting your livelihood. That is why we welcome you to contact McKinneyOlson Insurance today. We have cared for local businesses since our foundation in 1880, and our staff’s centuries of combined professional experience ensures we will tailor the ideal business owner’s policy for your unique needs.