Workers Compensation Insurance is the most misunderstood and questioned by business owners. Most don’t know what is covered, and how to manage it so the premiums don’t get out of control. Below we will go over the different aspects of coverage, and how you can manage the cost.
Some items to consider when purchasing a Workers Compensation Policy
Workers Compensation Insurance
This is the first part of the policy. This pays for any bodily injury or death caused by accident, or disease to an employee. Medical payments are unlimited and subject to the allowable payments per state guidelines. Disability, Rehabilitation, and Survivorship benefits are also paid under this coverage part. Willful misconduct, failure to comply with safety laws, and unlawful acts by a business owner could void coverage.
Employers Liability Coverage
Provides coverage if the employee can no longer work, and quality of life is diminished from a workplace injury. Also, provides coverage for a spouse if they suffer a consequential injury. For example, a spouse suffers from a heart attack once they saw their husband in the ER, in relation to a workplace injury. This coverage section is subject to policy limits, so you want to make sure you have enough based on the size of your business.
All My Workers Are 1099’s I Don’t Need Coverage
In most cases this is wrong! Each year, the states tighten up their definition of what is considered an “Independent Contractor”. If a business owner determines the labor rate, supplies the materials to do the job, provides an office to work out of, or when to work, these individuals are considered employees, not independent contractors. To avoid any issues with these situations you should do the following: 1. Have a Workers Compensation Policy 2. Have your subcontractor provide proof of their own Workers Compensation Policy 3. Verify that the subcontractor is a Sole Proprietor, has no employees, and invoices you for labor and materials.
Common Question About Workers Comp Insurance
This varies by state, and usually subject to how many employees you have. Your insurance agent should know what the state requirement is, but ultimately it is your responsibly. If you don’t abide by the state law you could be subject to significant fines. Also, just because you are not required by law, you still may be required by a client to have a Workers Compensation policy. One last point, if you do not have a policy you will not be protected by the state limitations, opening yourself to being responsible for an employee’s medical bills, and subject to potential lawsuits. Even if you have just one employee, we recommend obtaining Workers Compensation Insurance.
There are several ways you can manage your Workers Compensation Insurance. 1. You need to be proactive and review your payroll figures with your insurance agent at least twice a year. Since Workers Compensation Insurance premiums are based on payroll, it is best to make sure you are up to date so you are not “surprised” by a huge audit at the end of the year. 2. Make sure that your insurance agent is using the proper work classifications for your employees. Each individual work classification has a different premium rating, so you want to make sure your office personnel payroll is not rolled into your roofing laborers payroll if you catch my drift! 3. Creating a workplace safety program will earn you discounts on your policy. This will ultimately reduce your Workers Compensation Insurance premiums over time, and help you stay claims free.
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