Workers Compensation Insurance Quotes For Small Business

Workers Compensation insurance is often referred to as Workmans Compensation Insurance, Workers Comp Insurance, or WC. State Workers Compensation laws were developed to provide for more efficient compensation to injured workers and to protect small business owners against tort based lawsuits. As a result, Workers Comp became a no fault system of compensation that was funded by the purchase of a WC policy.

Examples of the types of claims that may be covered by Workers Compensation And Employers Liability insurance include the following:

• Store worker employee hurts back while lifting display stand.
• Receptionist is involved in auto accident while making a trip to the post office.
• An uninsured subcontractor is injured while assembling metal components for products that are to be sold.
• The wife of an injured employee sues for loss of consortium.
• An employee is injured while using a specialized piece of machinery and he sues the machinery manufacturer for damages. The machinery manufacturer then sues the small business for removing a safety guard from the machine.

State Laws May Require Workers Compensation Insurance:

Small business insurance buyers are required by most state laws to purchase Workers Compensation insurance if they have three or more employees. In some states, Workers Comp insurance may be required if a business employs two or more employees. The definition of employee usually includes owners of the business as well as employees of any subcontractors. The penalty for failure to carry Workers Compensation insurance may be severe in the event of an injury to an employee or uninsured subcontractor. The usual penalty is that the employer waives his common law defenses such as assumption of risk or contributory negligence and the end result is that the employer will almost always lose a direct lawsuit by an injured employee.

Even if your small business is not required to carry Workers Compensation Insurance, you should strongly consider carrying it on a voluntary basis. Since Workers Comp is based on a no fault system, opting into it means that you can no longer be sued on a direct basis by an injured employee. Once you purchase a WC policy, your only liability for injury is the cost of the policy premium. This can be inexpensive protection for the peace of mind of not having to worry about lawsuits from injured employees.

What Does Workers Compensation Insurance Cover?

State Workers' Compensation insurance statutes usually provide the following types of benefits for your employees and the employees of your uninsured subs who are injured on the job:

• 100% of all past and future medical bills resulting from an on the job injury.
• Weekly benefits for lost wages for a predetermined amount of weeks which is usually based upon 66.6% of the worker's average weekly wages for the prior year.
• Lump sum awards for disabilities.
• Lump sum awards for disfigurements.
• Death benefits.

Are You Covered For Injuries In All States?

Workers Compensation coverage is triggered for a particular state based on what is shown under sections 3A and 3C of your policy. Section 3A must list all states where you know that your employees or uninsured subs will be working as of the effective date of the policy. Section 3C provides coverage for all other states for unknown exposures that may occur during the policy period. Section 3C should indicate coverage for all states except the 3A states and the monopolistic fund states such as ND, OH, WA, WV, and WY. It is crucial that the proper states are named under sections 3A and 3C of your policy. If a mistake is made here, your coverage could be voided at worst or you may have to pay for part of the expenses out of pocket at best. Injured employees are often advised by their attorneys to forum shop for the state that will pay the largest benefits. In most cases, an injured employee can select between the state of injury, state of domicile, or the state where he is paid. All of these states must be covered under the policy.

Limits Of Workers Compensation Insurance And Employers Liability:

A Work Comp policy actually consists of two separate coverages. Workers Compensation does not have a specific limit since is pays the statutory benefits as required by state law. Therefore, the limits are listed as "statutory".

The other coverage that is provided under the policy is Employers Liability. Employers Liability responds to certain direct negligence based lawsuits against the employer in the rare instances where the injured worker has opted out of the Workers Compensation system. Typical limits for Employers Liability are $100,000 Each Accident, $500,000 Disease-Policy Limit, $100,000 Disease-Each Employee. However, higher limits are available for a very small additional charge.

The Workers Compensation And Employers Liability premium is determined by the following factors:

• A rate per $100. of payroll based on the employee's or uninsured sub's proper classification (ex: clerical, outside sales). This rate varies by state and by insurance carrier.
• Expense Constant flat charge (typically in the $200 range) to offset the carrier costs of issuing the policy.
• Experience Modification factor to reward or penalize the employer for his safety record and past claims history. The experience modification factor is computed by National Council On Compensation Insurance (NCCI) in most states. However, a business will not qualify unless it has paid a premium of at least $9,000 for the prior year or an average premium of $4500 for the two prior years.
• Assigned Risk Adjustment Program factor may penalize an employer in a state assigned risk pool if it has had claims of a significant size.
• Size Of Premium Discount is applied on a sliding scale when the premium exceeds $5,000.
• A discretionary credit or debit of up to 25% may be applied by the carrier in many states.

The final premium is subject to an audit where the auditor from the insurance carrier inspects the employer's financial and tax records to verify what payrolls were paid to employees as well as amounts paid to uninsured subs. In addition, the auditor verifies the classification codes and has the authority to change them if they were set up incorrectly on the Workers Compensation policy. The final audit may result in either a return premium or an additional premium depending on whether the original payroll projections were understated or overstated.

Special Workers Comp Insurance Concerns:

The following special situations require a discussion with your insurance agent about what additional Workers Comp policy endorsements may be required:

• Employees traveling outside of the US or Canada for more than 30 consecutive days. A permanent Foreign Workers Compensation policy may be required for the country of destination.
• Employees traveling outside of the US or Canada for less than 30 consecutive days may require a special policy to cover the expenses of repatriation, emergency evacuation, or endemic disease.
• Leasing workers from an employee leasing company or PEO.
• The employment of farm labor or other casual labor.
• Work that falls under the jurisdiction of U.S. Longshoreman & Harbor Act, Jones Act, Federal Employers Liability Act, Foreign Defense Base Act, Outer Continental Shelf Act, Non Appropriated Fund Instrumentalities Act, Black Lung Act or any other Federal Act.
• Employee who is company pilot.