Baltimore Businesses: Who Needs Worker's Comp and What Does it Cover?

Baltimore Businesses: Who Needs Worker's Comp and What Does it Cover?

| April 03, 2024

Worker's compensation (WC) insurance protects both your employees and your business in the unfortunate event of a work-related injury or illness. But with so many regulations, it can be confusing to know exactly who needs coverage and what's included. This blog post from American Insurance clarifies WC requirements and essential coverages for Baltimore businesses.

Who Needs Worker's Compensation Insurance in Baltimore?

In Maryland, WC insurance is mandatory for almost all businesses with employees. This includes full-time, part-time, and temporary workers. Here's a breakdown to clear up any confusion:

  • Required Coverage: WC insurance is mandatory for businesses with:

    • Full-time or part-time employees (including those on a probationary period)
    • Temporary workers (such as seasonal or contract employees)
    • Corporate officers (unless they are the sole owners and no other employees are present)
  • Exceptions: The following are exempt from mandatory WC coverage in Maryland:

    • Sole proprietors (without any employees)
    • Partners in a business partnership (without additional employees)**
    • Independent contractors (classified as such under Maryland law. This classification is based on factors like control over work methods, independent business ownership, and a written contract specifying the independent nature of the service)

It's important to note that even if you have a small business with just a few employees, WC insurance is still mandatory. Failing to obtain coverage can result in significant fines from the Maryland Workers' Compensation Commission. The Commission website provides resources to help you determine your classification obligations and avoid penalties https://www.wcc.state.md.us/.

Required and Optional Coverages in Your Baltimore Worker's Comp Policy

A standard WC policy offers several essential coverages:

  • Medical Expenses: This covers the cost of all necessary medical treatment for work-related injuries or illnesses, including:
    • Doctor visits and specialist consultations
    • Hospital stays, including surgery and associated costs
    • Medication and physical therapy
    • Diagnostic tests and imaging services

The extent of coverage will depend on your policy and Maryland state regulations.

  • Lost Wages: If an employee is unable to work due to a work-related injury or illness, WC will compensate them for a portion of their lost wages. The exact percentage and duration of benefits are determined by Maryland law. These benefits typically replace a portion (around two-thirds) of the employee's average weekly wage, with a maximum weekly benefit amount set by the state.

  • Vocational Rehabilitation: WC may cover vocational rehabilitation services to help an injured employee return to work or find suitable alternative employment if they can no longer perform their original job duties. These services can include job retraining, skills development, and career counseling.

  • Death Benefits: In the tragic case of a work-related fatality, WC may provide financial assistance to the deceased employee's dependents. These benefits typically include a portion of the employee's wages for a set period and funeral expenses. The Maryland Workers' Compensation Commission outlines the specific benefits offered to surviving dependents https://www.wcc.state.md.us/.

Beyond these mandatory coverages, you may want to consider optional coverages tailored to your specific needs, such as:

  • Employer's Liability Insurance: This protects your business from lawsuits filed by employees who claim you were negligent in causing their workplace injury. Standard WC policies cover medical expenses and lost wages, but they don't protect you from legal liability. Employer's liability insurance provides an additional layer of protection by covering your legal defense costs and any court-awarded damages to the employee.

  • Excess Coverage: Standard WC policies have coverage limits for medical expenses and lost wages. Excess coverage provides additional financial protection if a claim exceeds those limits. This can be particularly important for businesses in high-risk industries or those with the potential for catastrophic injuries.

Finding the Right WC Coverage for Your Baltimore Business

The specific coverages you need depend on the size and nature of your business. Here are some additional considerations:

  • Industry Risks: Baltimore's economy is diverse, with a strong presence in industries like construction, manufacturing, healthcare, and service industries. Businesses in high-risk industries like construction or manufacturing will likely need more comprehensive coverage compared to an office environment.
  • Number of Employees: The number of employees you have also impacts your risk profile. Businesses with a larger workforce are statistically more likely to experience workplace injuries.

A Baltimore-based insurance agent from American Insurance can help you assess your risks, navigate the legalities of WC coverage in Maryland, and design a WC policy that provides optimal protection for your employees and your business. Remember, having the right WC coverage is an investment in your employees' well-being, your company'