Hotels must carry many types of insurance. Commercial general liability is perhaps the most obvious, but this is just the foundation. Other types include building and business personal property coverage, equipment breakdown protection, and business income and extra expense (BI/EE) coverage.
Hotel owners and managers also need to consider workers’ compensation insurance. This is an essential consideration to protect your staff and your hotel.
Of course, chances are good that you have questions about workers’ comp for hotels. We’ve gathered the answers to some of the questions our expert representatives are asked most often to help you make informed decisions regarding your coverage.
In a nutshell, yes, hotels do require workers’ comp insurance in most states. Almost every state in the country requires businesses with employees to protect those employees with workers’ compensation insurance. The hospitality industry is no exception.
That said, there are always variances from state to state and from one type of hotel to another. For instance, if you own a bed and breakfast property and you are the only employee, you may not be required to carry workers’ comp insurance under the law.
Still, it’s worth purchasing even if you’re not legally required to do so. After all, your health insurance or property insurance won’t cover medical costs related to a work-related accident or pay a portion of your wages if you can’t work for some time.
While workers’ comp coverage requirements and costs vary a lot from state to state and industry to industry, the insurance works very similarly. It’s designed to cover short and long-term medical costs, pay for lost wages, and provide death benefits in the case of an employee dying from a work-related injury.
Let’s break each of those areas down and explain them.
When an employee is injured on the job and needs medical attention, workers’ compensation will pay the costs of the care. This also goes beyond the initial doctor’s appointment or emergency room costs. It will also pay for medications and treatment over time if they relate to the accident.
If an employee is injured on the job and unable to work, they have no income. Workers’ compensation will pay a portion of their regular earnings after a specific amount of time has passed. The average is two-thirds of their regular pay, and most states mandate that insurers begin paying out after an employee has missed five to seven days of work.
Workers' comp insurance will pay death benefits if an employee dies from a work-related injury. These come in a couple of different forms.
First, the insurance will pay at least some of the funeral costs, although the amount varies from state to state.
Second, the insurance will pay death benefits to the employee’s spouse and dependent children. This is usually only a percentage of the decedent’s income, and it generally lasts until the spouse remarries. Dependents will receive support until they turn 18 (or 23 if they’re full-time students).
While workers’ comp coverage is primarily designed to protect your employees, it also helps safeguard your business. But how?
One way is that it helps protect your hotel from liability for employees’ workplace injuries. A second way is that it means that you don’t have to pay for those injuries out of pocket. It may also significantly reduce the risk of a major financial loss if an employee is injured while performing work-related duties through a lawsuit.
While hotels are not exactly high-risk businesses, that does not mean your employees are risk-free. In fact, depending on their position, they can face significant risks daily. These can include:
Slip, trip, and fall accidents
Respiratory injury due to exposure to cleaning chemicals
Injury from mechanical equipment
Infectious diseases due to contact with waste (bodily waste, broken glass, pathogens, etc.)
Harassment and violence from guests and/or other employees
Repetitive movement injuries
Again, these risks vary greatly depending on an employee’s specific role within the hotel. For instance, a front desk staffer would have a very different risk level than a housekeeping team member or a groundskeeper. This is one reason each employee must be classified correctly in terms of their job code.
The single most common reason for high workers’ comp insurance costs is misclassified employees. The National Council on Compensation Insurance (NCCI) has over 800 different job class codes that insurers use to classify workers and the risks they’re exposed to. Some industries only have one or two codes – plumbers, for instance.
However, hotels have very diverse staffing needs and chances are good that your facility has many job class codes. Ensuring that they’re accurate is a critical consideration for two reasons.
First, it helps ensure that you’re getting the right coverage.
Second, it ensures that you’re not overpaying. It will also help you avoid the fallout from misclassification, like fines.
Here are some of the different positions that require varying job class codes within a hotel:
Every business owner knows how important it is to save money and you can reduce the costs of your workers’ comp coverage without sacrificing protection. In addition to ensuring accurate job class codes, you can also implement a return-to-work program, create a drug-free workplace, require safety training, and create a safety team.
Let’s look more closely at each of these.
Safety Training – Every business needs a safety program that’s designed to give employees important information. This should include things like lifting heavy loads properly, using safety glasses, and other best practices. It should also be tied directly to OSHA’s safety requirements.
Drug-Free Workplace – Alcohol and drug use is one of the leading causes of workplace accidents. According to the US Bureau of Labor Statistics, they contribute to 65% of on-the-job accidents every year. Creating a drug-and-alcohol-free workplace can dramatically increase your employees’ safety and the costs of workers’ comp for hotels. This should involve education, outreach, and testing.
Return-to-Work Programs – Often, employees injured on the job can return to lighter duties long before they’re ready to resume their previous roles. Creating a return-to-work program encourages employees to return when they’re ready at a lighter level to begin earning an income once more. Studies also show that employees who return to work with lighter duties recover more quickly.
Building a Safety Team – Many of the hazards your employees face are normal parts of their everyday environment. A safety team can identify hazards (worn carpeting, ice-prone walkways, etc.) that pose risks to employees and guests and then instigate efforts to repair, replace, or redesign the space to remove those threats. They can also monitor employee behavior, provide safety-related guidance, and more.
It’s impossible to list the types of accidents and injuries that fall under workers’ compensation, but they all share a few things in common. To be considered “compensable” and eligible under workers’ comp for hotels, an injury must have happened to one of your employees (not a vendor, guest, or contractor), be the result of a workplace injury or illness while the person was an employee (not a preexisting condition from a previous job), and cause impairment and/or lost wages.
You could buy workers’ comp insurance through your general liability insurance carrier in a perfect world. However, this isn’t a perfect world; not all insurers offer workers’ compensation insurance. Compounding that is the fact that underwriting guidelines may make your business less attractive to those that do. It’s all about their risk tolerance.
If you’re having a hard time finding workers’ compensation coverage for your hotel or other hospitality industry business, Kickstand Insurance is here to help. We’ve worked with business owners just like you to find affordable coverage that offers protection for your employees and peace of mind for you.
It takes about five minutes to complete our brief form and provide us with the information we need to start your quote. Then one of our experienced representatives will contact you with the quote and discuss how to customize your policy while ensuring accuracy and finding ways to reduce your costs.
Note: The information provided in this blog is intended for general informational purposes only and is not a substitute for professional legal or insurance advice. Laws and regulations regarding workers' compensation insurance are complex and vary by state and by specific circumstances. Therefore, readers are encouraged to consult with a qualified legal or insurance professional to obtain advice with respect to any particular issue or problem they might have.
Mordechai Kamenetsky, co-founder and lead agent of Kickstand, is recognized as an expert in workers' compensation. He is passionate about helping small businesses manage risks and lower their workers' comp costs. In his articles, he educates readers and clients on the intricacies of workers' comp insurance.