Q:Question  I started my own landscaping company a little more than a year ago. The business has grown to the point that I hired my first full-time employee recently and need to hire at least one or two more people over the next year. I've started looking into workers' compensation insurance, but I'm not sure it's right for a small company like mine. How do I know if I need workers' compensation insurance? 

We posed this question to Saul Salinas, a Farmers Insurance® agent based in Tucson, Arizona.

A:Answer  This is a question I hear a lot from business owners, and the answer is: it depends. You'll want to consider several factors.

First, a quick overview — workers' compensation insurance may help when an employee is injured on the job or gets a work-related illness. Coverage may include wage benefits for injured employees, and can pay for medical treatment or rehabilitation for eligible employees. This information alone may answer the question for you, but there are other factors you may want to consider.

Does your small business need workers' compensation insurance?

For many business owners, the decision is primarily based on the workers' compensation laws in their state. Workers' compensation insurance is governed by state law, and the laws differ from state to state. Some states don't require coverage for businesses with only a few workers; others do. You can look to your state's government website for specifics, or work with an insurance agent in your area to get more information.

When you start hiring workers, you naturally increase the chance of accidents and injuries happening, which increases your risk for liability if an employee is injured on the job. And if you're in an industry where there's more potential for injury — consider landscaping versus a desk job — it's important to think through what coverage will help keep your business running.

What if you run a business with a lower risk of injury to employees?

Aside from it being the right thing to do, providing a safe workplace for your employees is a legal responsibility for business owners. That may mean providing safety gear, proper tools and equipment, and safety training. Farmers sometimes helps business owners lower the cost of workers' compensation coverage by recommending the development of on-the-job safety training programs.

But let's face it: accidents can happen in any business, at any time. If one of your employees suffers an injury on the job, they may be in for a long and expensive recovery. The costs can mount quickly. If you don't have workers' compensation coverage, you and your business could be caught in a difficult position.

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