Sometimes called workman’s compensation insurance, workers’ liability insurance or workers’ comp insurance, covers your employees’ medical expenses and at least some portion of their lost wages if they are injured on the job. How does workers’ compensation insurance protect your business? Most states require companies to purchase workers’ compensation insurance for their employees. A few states have “pools” of insurance that is available for you to purchase, but in most states, companies must find private workers’ compensation policies. Because workers’ comp insurance is mandated by law, small-business owners often think that it is just one more overhead expense that provides little benefit. But good workers’ compensation insurance is actually an affordable benefit that protects both you and your employees. Following are the optional parts of workers’ comp insurance policies that have an impact on the cost and value of the coverage for you and your employees: In the employers’ liability section, or “part two” coverage, your legal expenses would be covered if an employee makes an inappropriate claim of work-related illnesses or injuries. While this section is almost always included in workman’s compensation insurance, you can choose the amount of liability coverage in this section. Coverage for employees who are injured in states outside those where your business normally operates. Coverage for various types of injuries and illnesses. The mandated part of this section depends on the state where your business is located, but you should be aware of what is and is not covered. Coverage for funeral expenses and financial support to dependents. Reimbursement percentages for lost wages. The cost of workers’ comp insurance can vary widely depending on these options, so if you are comparing premium costs, you need to be aware of these variables.
There are three basic parties to a surety bond. The Principal is the one responsible for obtaining the bond, and whose work performance is the subject of the bond. The Oblige e is the beneficiary of the bond, and usually is paying the Principal for the work covered by the bond. The Surety is the underwriting company who researches and issues the bond, and who pays in the event a valid claim is made against the bond. Each party to a surety bond receives some form of benefit. The Oblige e receives compensation for breach of contractor or unsatisfactory work without the time consuming process of going to court. The Principal is able to acquire and perform jobs by meeting the bond requirements of work contracts. And, of course, the Surety calculates their rates to generate a profit by underwriting bonds. There are two main types of surety bonds. Contract bonds relate to work done under a specific agreement, often related to building construction, but also includes bid bonds, bail bonds, and several other types of bonds. Here, the builder is the Oblige e and a company contracted to undertake an aspect of the project is the Principal. The second type, a commercial surety, is similar, except the bond is a requirement for obtaining a specific kind of license or permit. For example, a notary must be bonded against claims of negligence or fraud for the benefit of their clients. In a commercial surety bond, the licensed or permitted entity is the Principal and the Oblige e is any unspecified person who engages the Principal in transactions related to the bonded purpose. The existence of surety bonds transfers risk, thereby facilitating business. If a builder had to sue a contractor to enforce an agreement, they would assume massive losses for all the time work was not performed. If permitted individuals or businesses were not bonded, customers might not patronize them for fear of loss, and the businesses themselves might not perform certain activities to avoid the risk. Though it is the Surety who pays the Obligee in the event of a claim against the surety bond, this does not indemnify the Principal. In fact, under the terms of the bond, the Surety will likely be able to collect its costs from the Principal, even if it means taking them to court or bankrupting them. The purpose of the bond is simply to guarantee swift and complete payment to the Oblige e.
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