A 2010 power plant explosion in Middletown, Connecticut killed six workers and injured 50 others. The explosion occurred during the construction of a new plant. Crews were using natural gas at high pressure to clean out pipes and something sparked an explosion. In addition to the fatalities, several workers suffered serious injuries, including injuries to the head, neck, face, knee, and ear—including hearing loss.
More than five years later, they are still feeling the effects of their injuries and are suffering from post-traumatic stress disorder. Any business, no matter how safe, can be affected by worker illnesses and injuries. While the example above is an extreme case, business owners must protect their workers and their businesses from the costs associated with all kinds of unforeseen circumstances.
Connecticut workers’ compensation insurance provides wage replacement benefits and medical treatment for employees who have been injured or become ill on the job. It prevents employers from bearing the costs of injuries that occur in the course of normal operations and compensates workers for their injuries and time away from work.
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Connecticut Workers’ Compensation Laws
Connecticut workers’ compensation insurance provides medical and monetary benefits to employees who sustain work-related injuries or illnesses. It is the exclusive remedy for employees who are injured or become ill on the job; an injured employee may not sue the employer for any other benefits.
Connecticut has a no-fault workers’ compensation system. It provides benefits regardless of who is at fault for the injury or illness. The Connecticut Workers’ Compensation Act (WCA) outlines and governs employer responsibilities relating to workers’ compensation in the state. The Connecticut Workers’ Compensation Commission administers the system and enforces employer responsibilities under the law. Under the WCA, all employers must maintain adequate workers’ compensation coverage for their employees. An employer is defined as any person or organization that uses the services of one or more employees for pay.
The Basics of Connecticut Workers’ Compensation
Who Is Covered?
All businesses with one or more full-time, part-time, or contract employees must purchase workers’ compensation insurance in Connecticut. There are several exemptions and special circumstances that Connecticut employers should be aware of:
- Sole proprietors are excluded from coverage but may elect to be included.
- Partners are included in coverage but may elect to be excluded.
- Corporate officers are included in coverage but may elect to be exempt from coverage.
- Members of LLCs that contain only one member are considered to be excluded but may elect to be included.
- Members of multi-member LLCs are included in coverage unless they elect to be excluded.
What Is Covered?
Employees are entitled to the following Connecticut workers’ compensation benefits:
- Medical treatment
- Wage replacement for temporary or permanent disability
- Vocational rehabilitation/job retraining
- Dependents’ death benefits
- Relapse or recurrence benefits
Where Can You Buy It?
Employers can purchase Connecticut workers’ compensation coverage through private insurance carriers and agents who are licensed to sell it. Employers can also self-insure with approval from the Workers’ Compensation Commission.
Connecticut employers can also use a combination of insurance coverage and self-insurance or a substitute system of insurance if the Commission approves it.
How Much Does Connecticut Workers’ Compensation Insurance Cost?
The National Council on Compensation Insurance (NCCI) assigns classification codes to every occupation. Each classification code is assigned a base rate for workers’ compensation insurance. High-hazard occupations have higher rates than low-hazard occupations.
Your Connecticut workers’ compensation insurance premium is based on how many employees you have, your total payroll, your industry classification code, and your history of accidents and workers’ compensation claims. Your annual payroll at the beginning of the policy period is divided by 100, and then multiplied by the base rate for your class code.
- Classification Code 0042: Landscaper
- Base Rate: $9.43
- Employer payroll (example): $100,000
- Premium calculation: $9.43 per $100 of employer payroll (or 9.43% of payroll)
- Estimated annual premium for sample landscaper: $9,443.00
The landscaper above likely has employees in more than one classification. All of its applicable classifications and related premiums are combined to determine the full Connecticut workmans’ comp insurance premium.
Connecticut Workers’ Compensation 2017 Base Rate Examples
Connecticut has the second highest workers’ compensation insurance rates in the U.S. The Connecticut workers’ compensation system is devised to benefit employees over employers. For this reason, there are fewer carriers competing in the workers’ compensation market, keeping rates higher than the national average.
The NCCI sets workers’ compensation rates in Connecticut. It assigns a low rate and a high rate for each Connecticut class code. Base rates vary by class code and the insurance company’s underwriting standards.
Here are some sample base rates (rate per $100 of employer payroll) as of January 1, 2017.
- 0042 Landscaping: $9.43
- 5183 Plumbing: $6.07
- 5427 Carpentry: $10.42
- 8017 Retail Store: $1.93
- 8810 Clerical: $0.14
- 9082 Restaurant: $1.59
What Is Experience Rating and How Does It Affect Your Premium?
Your Connecticut workman's comp premium will be affected by your history of accidents and claims over time. If you have a safe workplace, experience rating will improve your workers’ compensation premium. If you have a poor claims history, experience rating will increase your Connecticut workers’ compensation premium.
An experience modification factor, or experience mod, is an additional factor that may be applied to your workers’ compensation premium calculation. It increases or decreases your workers’ compensation premium for a given year. Your mod is a numerical representation of your actual losses compared to expected losses for your industry (plumbers are compared to plumbers, restaurant workers to restaurant workers, etc.).
Employers in Connecticut will receive an experience modification factor when they meet:
- $11,000 in policy premium generated during the last year or last two years
- $5,500 average policy premium generated for more than two years
If your workmans’ comp policy is experience-rated, your premiums are determined with the following formula:
- Base Rate X Payroll X Mod = Premium
Your mod represents a debit or credit that is applied to your workers’ compensation premium, as follows:
- All employers start out with a mod of 1.0. This mod does not impact premium.
- A mod greater than 1.0 means that losses were worse than expected, and premium goes up (a debit mod).
- A mod less than 1.0 means that losses were better than expected, and premium goes down (a credit mod).
Consider these examples of how experience rating affects Connecticut workers’ compensation premiums:
- Premium: $100,000
- Mod: 0.75 (25% premium credit)
- Premium with mod credit applied: $75,000
- Premium: $100,000
- Mod: 1.0
- Premium is not adjusted
- Premium: $100,000
- Mod: 1.25 (25% premium surcharge/debit)
- Premium with mod debit applied: $125,000
Most businesses cannot control their industry classification or how risky their employees’ jobs are. But by keeping claims and related costs low, you can control your mod and have an impact on what you pay for Connecticut workman's comp insurance.
How to Find Connecticut Workers’ Compensation Insurance
Purchasing Connecticut workers’ compensation insurance is complex and requires the help of a trusted advisor. We have provided only simplified examples and calculations in this article.
To make sure you purchase the right policy to protect your business and your employees, seek help from a Trusted Choice® insurance agent who can help you learn more about the workers’ compensation laws in Connecticut. An independent agent can help you get quotes from multiple insurance companies so you can be sure you are making the right choice.
Start your search for an independent insurance agent now.