Sean Tenney was injured in 2014 when he tore a tendon in his back moving a 1,300-pound piece of equipment while working for Highway Intelligent Traffic Solutions in Greensboro.
Unfortunately, his employer had let their workers’ compensation policy lapse, leaving Tenney on the hook for his own medical bills and lost wages. His employer could face major fines and a possible lawsuit.
On-the-job accidents happen all the time, and if your business is not carrying the proper workers’ compensation coverage, you could end up being sued by your injured employee and looking at a whole host of fines.
Workers' compensation insurance protects your employees and you against sudden accidents such as this one, as well as injuries that take longer to manifest, such as neck or back injuries.
North Carolina requires all businesses that regularly employ three or more employees to obtain workers’ compensation insurance or qualify as self-insured employers.
There are exceptions, and all of them are listed in the North Carolina Industrial Commission Workers’ Compensation pamphlet. Here are just a few common exceptions:
Just like most states, the North Carolina’s workers’ compensation program is a no-fault system, which means that employees are guaranteed benefits regardless of who is at fault in the accident or injury. In return for these guaranteed benefits, employees give up the right to sue their employers, which means that employers don’t have to worry about expensive and time-consuming lawsuits.
A North Carolina workers’ compensation policy protects your employees not only when they are at the office, but also when they are out of the office, as long they are performing a work duty. Employees who are traveling for work, working at a client site, or even at an after-hours work event, are all protected by your policy.
North Carolina workers’ compensation will pay out benefits to any employee who is hurt while on the job. The coverage protects employees who experience sudden falls and accidents, and also longer term injuries such as back and neck injuries, as well as repetitive stress injuries.
A workers’ compensation policy will also cover illnesses such as cancer that are caused by the workplace. A death benefit is paid to the surviving family members if an employee is fatally injured in the workplace. A policy will pay a lump sum payment for any permanent disfigurements that are the result of a workplace accident.
Workers' compensation insurance will cover all medical costs related to the accident, including treatments such as physical therapy. The policy will also cover lost wages and job retraining if the injured employee is unable to return to their previous job due to the injury.
In North Carolina there are several options for purchasing a workers’ compensation policy:
Regardless of where you decide to purchase your workers’ compensation policy, it’s best to talk to an insurance expert first. Workers’ compensation can be a complicated insurance product. A Trusted Choice® agent can help you find a great policy and make sure you are in full compliance with all state laws.
North Carolina doesn’t use the National Council on Compensation Insurance (NCCI) classification system to set class codes for employees. The North Carolina Rate Bureau sets class codes and base premium rates, which are designed to reflect how dangerous a particular job is when compared to other careers. A high-risk job will carry a higher base rate than a job that has a lower accident and claim rate.
Class codes are used to identify the various types of workers at a business and set a base rate for their workers’ compensation premium. Rates are reviewed on a yearly basis, so your workers’ compensation costs will fluctuate.
Here's an example of how base rates are used to set premiums:
North Carolina Classification Code: 5190 Electrical
Base Rate: $4.57
Employer Payroll: Example: $100,000
Premium Calculation: $4.57 per $100 or 4.57% of payroll.
Estimated Annual Premium: $4,570
Most businesses will have more than one class of employee. This electrical company could also employ sales, accounting and administrative staff in addition to their electricians. All of these different employee types would fall under different class codes.
In order to calculate the entire premium for your business, you would need to total the various class codes and resulting premiums.
Discounts are allowed in North Carolina, so insurers will usually offer a variety of discounts to help make their policies more attractive. While discounts will vary by insurer, a few of the more common discounts are:
Here are just a few base rate examples for different class codes for 2016.
5221 Concrete Construction $4.33
5437 Carpentry/Trim $5.97
5474 Painting $6.50
5478 Flooring $3.64
5645 Carpentry NOC Residential Construction $14.26
7228 Short Haul Trucking $7.56
8006 Gas Station $3.09
8017 Retail Store $1.64
8380 Auto Shop $2.57
These premium rates are applied to every $100 of wages for each employee.
In North Carolina, employers can use experience modifiers or e-mods, which can lower or raise your workers’ compensation premium depending on your accident and claim record. E-mod programs are designed to reward employers that keep their workers’ compensation claims low and punish employers that have a number of claims or accidents.
E-mod programs compare your accident and claim rate with other businesses in your industry that are roughly the same size. If you have fewer accidents and claims, your business will be issued an e-mod credit, which will lower your workers’ compensation premium. If you experienced a higher accident and claim rate, you will get an e-mod debit, which will raise your premium.
Businesses that are new to the e-mod program will be given a rating of 1.0, which is considered neutral. If you have a number of accidents or claims during the year, your rate will rise above 1.0, resulting in a debit. If you manage to maintain a safe workplace and have very few or no accidents, your rating will drop below 1.0, and a credit will be issued.
The e-mod program is one factor of the workers’ compensation program that is under your direct control. Managing accidents and claims can help dramatically lower your workers’ compensation premium.
One way to keep your e-mod number in credit territory is to limit small claims. A large number of small claims will almost always have a more negative affect on your rating than one big claim.
Workers' compensation coverage is a complicated insurance product, and using an experienced agent is the best way to ensure you get the correct policy for your needs and ensure your business is in full compliance with North Carolina workers’ compensation laws.
An independent insurance agent can gather quotes for you and present the best options. They can also make sure that you are receiving all discounts that your business is qualified to receive.
Contact a Trusted Choice agent today to start searching for the best workers’ compensation policy for your business.