A self-employed contractor was injured in a Delaware Home Depot store when a stack of 18 wooden doors fell from a shelf above him. The man was so severely injured he remained unable to return to work after two operations on his back.
While this is an extreme example, back injuries are common in the workplace, even in jobs where you might not expect them to occur. Employees with dangerous occupations can get seriously injured, and even office workers can be victims of trips and falls, repetitive motion injuries, and other far more serious accidents.
No matter what type of work your employees do, it is your responsibility as an employer to help them pay for medical expenses if they are injured on the job. Workers’ compensation insurance is required for most employers in Delaware. It ensures that injured workers get medical care and income protection while they are unable to work. And it also prevents you from being sued for damages.
Delaware Workers’ Compensation Laws
The Delaware Legislature created the state workers’ compensation system in order to provide benefits to workers who are injured or contract an illness while on the job. Employers are prohibited from charging employees for any portion of the premium or expense of carrying workers’ compensation insurance. Employees must meet certain entitlement requirements in order to receive benefits.
Delaware’s workers’ compensation laws are established and administered by the Delaware Department of Labor, Division of Industrial Affairs Office of Workers’ Compensation.
The Basics of Delaware Workers’ Compensation
Who Is Covered?
Employers with one or more employees are required to carry workers’ compensation insurance in Delaware. Farm workers are exempt from this requirement; however, agricultural employers may elect to provide the coverage. There are a variety of other exclusions and exemptions:
- Independent contractors are exempt from Delaware workers’ compensation coverage.
- Any household worker who earns $750 or more in any three-month period from a single household is covered.
- Sole proprietors and partners are excluded from coverage, but may elect to be included. Immediate family members of sole proprietors are covered but may elect to be excluded.
- Corporate officers of a corporation and members of an LLC are included in coverage, but up to 8 corporate officers or 4 members of an LLC may exempt themselves. Construction corporations or LLCs may elect to exclude up to 4 corporate officers who are stockholders or 4 members of the LLC.
What Is Covered?
Delaware workers’ compensation insurance pays for all necessary medical treatment and hospitalization services related to a work-related injury or illness. In addition, Delaware workers’ compensation provides the following benefits for injured workers:
- Temporary total disability benefits
- Temporary partial disability benefits
- Permanent impairment benefits
- Disfigurement benefits
Delaware workmans’ comp insurance also pays death benefits to a worker’s dependents when a job-related accident or illness results in death.
Where Can You Buy It?
Delaware workers’ compensation insurance can be purchased from an insurance agent who is licensed to sell workers’ compensation insurance in the state. Employers can self-insure with approval from the state. Because of the small size of the state, there are relatively few insurance carriers who offer workers’ compensation insurance in Delaware.
If you cannot obtain insurance through the standard workmans’ comp market, coverage is available through the Delaware Workers’ Compensation Insurance Plan (DIP). The DIP is the carrier of last resort for employers who cannot obtain coverage elsewhere; rates are up to 50% higher than private carriers, and a surcharge is also applied to every policy.
How Much Does Delaware Workers’ Compensation Insurance Cost?
Delaware is a competitive ratings state, which means it allows private carriers to offer workers’ compensation insurance to employers in the state. While most states use the National Council on Compensation Insurance (NCCI) to set and regulate rates, Delaware does not.
The Office of the Insurance Commissioner and the Office of Workers’ Compensation set the workers’ compensation rates for Delaware employers. The Delaware Compensation Rating Bureau (DCRB) administers all rules, approves plans, and manages the Delaware State Fund.
Workers’ compensation rates in Delaware are quite high due to lack of competition among private carriers. In fact, Delaware’s workers’ compensation rates are the 9th most expensive in the U.S.
For individual employers, workmans’ compensation insurance premiums are based on the number of employees, total payroll, employer class code, and the employer’s history of accidents and workers’ compensation claims. The annual payroll at the beginning of the policy period is divided by 100, and then multiplied by the approved base rate for the employer’s class code.
- Classification Code 461: Machine Shop
- Base Rate: $5.16
- Employer payroll (example): $100,000
- Premium calculation: $5.16 per $100 of employer payroll (or 5.16% of payroll)
- Estimated annual premium for sample machine shop: $5,160.00
This machine shop probably has employees in more than one classification. All of its applicable classifications and related premiums are combined to determine the full Delaware workmans’ compensation insurance premium.
Workers’ compensation premiums in Delaware may vary somewhat among similar employers based upon the carrier’s underwriting standards, an employer’s experience rating, and state-approved discounts.
Delaware Workers’ Compensation 2016 Base Rate Examples
The Delaware Office of Workers’ Compensation assigns base rates for each employer class code in the state. Each class code is assigned a low rate and a high rate.
Here are some sample low rates (rate per $100 of employer payroll) as of December 1, 2015.
- 012 Landscaping: $5.29
- 663 Plumbing: $6.22
- 652 Carpentry Non-residential: $10.34
- 928 Retail Store: $3.09
- 953 Clerical: $0.24
- 975 Restaurant: $1.93
What Is Experience Rating and How Does It Affect Your Premium?
After you establish a workers’ compensation claims history, experience rating makes a significant difference in what you pay over time. 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 Delaware will receive an experience modification factor when:
- The premium developed for the past two years is $3,161 or more
If your Delaware work comp policy is experience-rated, your premiums are determined with the following formula:
- Base Rate X Payroll X Mod = Premium
Delaware experience mods are calculated by the DCRB. Your mod represents a debit or credit that is applied to your workers’ compensation premium.
- A mod of 1.0 is considered to be average and does not impact your premium. All employers start out with a mod of 1.0.
- A mod greater than 1.0 is a debit mod. This means that your losses were worse than expected, and your premium goes up.
- A mod less than 1.0 is a credit mod. This means your losses were better than expected, and your premium goes down.
Here are some examples of how experience rating impacts your Delaware 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
You cannot control your industry classification or the degree of risk that is inherent in your business. But you can control your mod by keeping claims and related costs low.
How to Find Delaware Workers’ Compensation Insurance
This article offers only highly simplified examples and calculations of typical workers’ compensation premiums. For most employers, purchasing workers’ compensation is complex and requires the help of a trusted advisor. A Trusted Choice® insurance agent can help you learn more about the workers’ compensation laws in Delaware, and can help you obtain coverage for your business.
Start your search for a local Trusted Choice agent now.