Industrial Insurance
Industrial insurance can help protect both your business and its workers against losses caused by numerous threats, including workplace injuries and illnesses.
Written by
Christine Lacagnina has written thousands of insurance-based articles for TrustedChoice.com by authoring consumable, understandable content.
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Cara Carlone is a licensed P&C agent with 20 years of experience. She has her P&C license in RI and TX and holds CPCU, API, and AINS designations.
From oil and gas to manufacturing and telecommunications, businesses in every industry face numerous risks daily. Certain risks are industry-specific, while others, such as fire damage and employee injuries, are broader threats. If your business has employees, you can help protect them with industrial insurance regardless of your company's niche.
Fortunately, an independent insurance agent can help you find the right industrial insurance for your unique company. They'll get you matched to the ideal amount of coverage for the job. But first, here's more about industrial insurance, what it covers, and why it's necessary.
What Is Industrial Insurance?
Industrial insurance is considered the same as workers' compensation insurance in some areas. However, for many companies, industrial insurance is a broad set of coverage that protects both commercial operations and employees. For that reason, industrial insurance falls into two categories:
- Workers' compensation insurance: Covers costs related to work-related injuries, illnesses, and fatalities by providing ongoing compensation like replacement income, medical costs, and more to the victim or their family. Laws vary by state, so make sure you talk with your independent insurance agent specifically about your location and specific needs.
- Commercial insurance: Provides the complete commercial coverage industrial corporations need. These corporations deal with risks specific to their industries and need customized business insurance policies to cover risks like flammable or toxic substances and the risks involved in using heavy-duty machinery, equipment, and large commercial trucks.
Depending on the laws in your state, your business is likely required to have at least workers' compensation insurance if you have at least one employee. A local independent insurance agent can help you determine if your business is required to have this coverage.
Recent Stats for Workplace Fatalities, Injuries, and Illnesses
The importance of workers' compensation and industrial insurance can be better understood when considering just how many injuries, illnesses, and fatalities occur in the U.S. workforce annually. If businesses lack the proper coverage, these incidents are extremely expensive to recover from. Here's an overview of the frequency and cost of worker injuries, fatalities, and illnesses in recent years.
- There are about 15 worker fatalities per day in the U.S.
- Additionally, about 12,000 workers are injured on the job each day.
- Workplace illnesses and injuries cost the U.S. an estimated $167 billion each year.
With thousands of workplace-related injuries, fatalities, and illnesses occurring every year, having indemnity coverage for your business's staff is critical. Without industrial insurance coverage, not only could your business be on the hook for the cost of employee injuries and illnesses, but it could also face harsh penalties from the state for failure to meet insurance requirements.
What Does Workers' Compensation Insurance Cover?
Workers' compensation has several important features and is designed to protect both your labor force and you, the employer. Here are a few important details about workers' compensation that business owners should be familiar with:
- Workers' compensation insurance covers costs related to workplace employee injuries, illnesses, and deaths. These incidents must have been caused by job duties or the work environment in some way. For example, an employee could have developed a shoulder injury due to lifting heavy objects daily, as required by their job duties. A covered injury could also be related to getting hurt on a sharp edge in the workplace. Inhaling toxic fumes could be a covered cause of workplace illness.
- Workers' compensation insurance also pays to replace a portion of your employee's wages during recovery or long-term if the worker is unable to return to work. Typically, workers' compensation provides wage replacement of up to two-thirds of the employee's typical salary, depending on their base pay, during the time they cannot work.
- In exchange for workers' comp benefits, injured or ill employees are prohibited from suing their employers for their injuries. This is another major incentive for all businesses with employees to get workers' compensation insurance, even if coverage isn't required by law.
- The legal requirements and exclusions vary widely from state to state. Some states require business owners to have workers' comp even if they don’t have any employees. Others require any business with more than a certain number of full-time employees (e.g., three or four) to have workers' comp. Certain industries, such as agriculture, are often exempt from workers' comp requirements.
It’s important to find a knowledgeable local independent insurance agent who knows all about your state's laws and requirements. Regardless of your state's regulations, you may want to evaluate your company’s workers' comp plan to protect your business from on-the-job injuries, illnesses, and deaths.
Some states allow you to self-insure if you have the financial capability to do so and have an active accident prevention program. Your state’s Department of Insurance or another agency may oversee your self-insurance program.
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Who Needs Industrial Insurance?
In many states, most businesses with at least one full-time employee are required to have at least the workers' compensation portion of industrial insurance. Most businesses are also required to carry other forms of commercial insurance, such as commercial property insurance, if they rent their business property, such as the building it's housed in.
Businesses that rely on company vehicles are also required to carry commercial auto insurance to protect against losses due to accidents, theft, vandalism, and lawsuits.
Workers' compensation insurance is not required for every type of business industry, even in states that mandate this coverage for most companies with employees. Each state provides a list of workers' comp exemptions, which outlines which types of businesses aren't required to have coverage and how many employees must work for your business for regulations to apply to you.
For example, your business may only be required to have workers' comp if it employs at least two full-time workers, but coverage may be optional if you have a handful of part-time or seasonal employees.
Common exemptions from workers' compensation insurance requirements:
- Sole proprietors, partnerships, and LLC members with management responsibilities
- Employees of private homes, such as gardeners or maintenance workers
- Workers who receive assistance from religious or charitable organizations
- Agricultural workers
- Workers who are minors and employed by their families
- Newspaper carriers
- Musicians and other entertainers
- Student volunteers
- Law enforcement volunteers
- Barbers and cosmetologists
- Racing jockeys
- Insurance agents and brokers
- Student volunteers
- Local government or charitable organization volunteers
- Community service workers
Be sure to review your state's specific laws for full transparency on whether workers' comp is required for your unique business. Regulatory measures for workers' comp can mean businesses that fail to secure coverage may face fines and other penalties, like temporary forced suspensions of operations.
Industrial Insurance Customized to Your Industry
No matter what industry you work in, there's a customized industrial insurance program to meet your specialized needs. Here are some of the industries covered:
- Oil and gas
- Agribusiness
- Aviation
- Transportation
- Technology
- Telecommunications
- Clean energy
- Public sector services
- Financial institutions
- Construction
- Fabricated metal manufacturers
- Wood and paper
- Glass manufacturing
- Sanitation
If you're unsure whether you need industrial insurance, an independent insurance agent can help advise you.
Additional Coverage Your Industry May Need
The specific coverage plan your company needs will depend on a number of different factors, like the materials you handle, work environment risks, customer risks, and the size of your workforce. For example, your organization may need a comprehensive business insurance policy that includes:
- General liability insurance: Covers bodily injury and property damage claims by non-staff visitors, customers, and other third parties.
- Commercial property insurance: Covers damage to company property, such as the building and grounds, from a range of causes, including fire and severe weather.
- Equipment breakdown insurance: This coverage protects your company from the cost of potential breakdowns of electrical infrastructure and key pieces of business equipment such as steam boilers.
- Business interruption insurance: Covers loss of income due to any covered event that requires a suspension of operations, such as extensive fire damage. Coverage helps to replace lost revenue and keep the business functioning during repairs or rebuilding.
- Product liability insurance: Provides coverage for costs related to claims against your company arising from third-party injury or illness related to the use of your products, including lawsuit costs like attorney, administrative, and court fees.
- Commercial vehicle insurance: Covers your business's vehicles, such as delivery vans, against losses caused by numerous disasters, including accidents, lawsuits, theft, and vandalism.
- Cyber liability insurance: Covers your business against losses caused by data breaches, cyber-attacks, and other threats that may expose, sell, or distribute sensitive and private data like customer credit card numbers.
- Professional liability insurance: Covers your business against the cost of lawsuits related to third-party claims of errors and omissions, such as incomplete work or improper advice or services performed that cause harm in some way.
You may also need additional coverage to meet your full risk management requirements. An independent insurance agent who specializes in business insurance can help you address all of your company's coverage needs in one convenient policy.
Here's How an Independent Insurance Agent Can Help
Independent insurance agents excel at matching the most appropriate policy to a business's needs. They're free to shop and compare quotes from multiple carriers to find you the best deal available. And down the road, your agent will still be there to help you file business insurance claims or update your coverage as necessary.
Frequently Asked Questions about Industrial Insurance
Industrial life insurance is purchased by industrial workers and typically has a total coverage limit of $10,000, which is considerably lower than traditional life insurance policies. Industrial life insurance offers an affordable life insurance coverage alternative for individuals on a strict budget. Traditional life insurance can be bought by any individual, regardless of the industry they work for.
Industrial life insurance is typically sold to industrial workers and comes with much lower limits than traditional life insurance. Individuals in the construction and manufacturing fields are common industrial life insurance customers.
Washington State law mandates that businesses must carry workers' compensation, or industrial insurance, to protect their employees against workplace injuries and illnesses. Employers in Washington State are required to pay industrial insurance premiums.
The workers' comp portion of industrial insurance may provide disability benefits for employees. Workers' comp disability benefits vary by state and business industry, so be sure to review any official content explaining your state's regulations for industrial insurance and disability.
https://www.insuranceopedia.com/definition/2339/industrial-insurance
https://dor.wa.gov/manage-business/state-endorsements/industrial-insurance
https://www.usi.com/property-casualty/industrial/
https://www.osha.gov/data/commonstats
https://visionarylawgroup.com/how-many-people-are-injured-on-the-job-each-day/#:~:text=Every%20day%2C%20thousands%20of%20workers%20face%20injuries%20at%20their%20workplaces,critical%20issue%20in%20workplace%20safety.
https://injuryfacts.nsc.org/work/costs/work-injury-costs/#:~:text=The%20costs%20reflect%20the%20impact,administrative%20expenses%20of%20%2454.4%20billion.