Oops! We’ve all done it at some point in our lives. We make a mistake while serving a client. Mine cost me a little over $2,000 in penalties to the Internal Revenue Service for failure to file an extension on a partnership tax return. Not a good day.
Insurance is a business concept whereby the law of large numbers is applied. A group of individuals or businesses agree to offset the loss of any member if the loss is associated with an act of God or due to an accident.
Worker’s Compensation Insurance a.k.a Workman’s Compensation Insurance provides for the medical cost of the sustained injury and for lost wages during recovery. In addition, if the worker sustains permanent disability, the insurance provides compensation until the Social Security Administration’s Disability Program starts.
Insurance is a risk reduction tool used in our private and business lives. It is founded on the basic premise that a large group of individuals will cover a catastrophic event for one of the members sometime in the future. In general, the insurance company uses actuarial science (law of large numbers) to calculate the financial cost of accidents over a given period of time.