In 2012, Dennis Whedbee was working on an oil well on the Sweet Grass Woman lease site around Mandaree, North Dakota. When a pipe fitting blew, the 50-year-old derrick hand was hit by oil and sludge that was pressurized at more than 700 pounds per square inch, ripping his left arm off below the elbow.
If the company Dennis worked for had a workers’ compensation insurance plan in place, it would cover the cost of all medical procedures; in cases such as this, it would also pay out a lump sum payment for a permanent disfigurement.
Carrying a workers’ compensation policy is the best way employers can make sure employees are taken care of after a work-related injury and protect themselves against expensive and time-consuming lawsuits.
North Dakota is one of four states in the country that doesn’t allow private insurers to write workers’ compensation policies. All workers’ compensation insurance is sold and managed via the state funded North Dakota Workforce Safety and Insurance.
It runs the state fund and all benefits and claims are paid out of this state managed fund. The North Dakota Workforce Safety and Insurance fund sets all class codes and premium base rates for workers’ compensation policies. North Dakota also does not allow companies to self-insure, so every business in the state must purchase a policy through this fund.
As with all other states, the workers' compensation program in North Dakota is a no-fault system, which simply means that employees are guaranteed benefits regardless of who is at fault in the accident or injury. In exchange for these guaranteed benefits, employees give up their right to sue their employer, which protects the employer from time-consuming and expensive lawsuits.
A workers’ compensation policy in North Dakota will pay benefits to any employee injured on the job. These policies will pay out for sudden falls and accidents as well as conditions that can take longer to manifest, such as neck and back injuries, or issues such as repetitive stress injuries, which are common in office workers.
A workers’ compensation policy will also pay out for illnesses such as cancer that are caused by working conditions.
Workers' compensation insurance covers the cost of medical procedures, lost wages and any other expenses that are related to the injury. This would include treatments such as physical therapy and job retraining if that is necessary. These policies also pay out a lump sum payment for permanent disabilities and a death benefit if an employee is fatally injured.
In North Dakota, workers’ compensation insurance is required regardless of how many people are employed by the company. There are a few exceptions; the complete list is available on the North Dakota Workplace Safety and Insurance website, but the exceptions include:
A North Dakota workers’ compensation policy will cover your employees regardless of where they are at the time of the accident, as long as they are working. This means that employees who are traveling for work, at a client site, or even at an after-hour networking event are all covered by the policy.
North Dakota is a monopoly state, so it issues its own class codes and doesn’t use the employee classification system developed by the National Council on Compensation Insurance .
The North Dakota Workforce Safety and Insurance Fund (WSI) sets class codes and premium rates, which are set to reflect how dangerous a particular occupation is when compared to other careers. An occupation that has a high risk of accidents will carry a higher base premium rate than jobs that are considered safer.
Class codes are assigned to different classes of workers and help to establish the base rate for that particular type of worker. Base rates typically change on a yearly basis.
North Dakota Classification Code: 1802 Stonecutters
Base Rate: $4.54
Employer Payroll: Example: $100,000
Premium Calculation: $4.54 per $100 or 4.54% of payroll.
Estimated Annual Premium: $4,540
The majority of businesses have more than one class of employee. The business that this stonecutter works for may also employ sales, accounting and administrative staff, all of which would fall under separate class codes. In order to calculate your entire workers’ compensation premium you will need to total the various class codes and premiums and to multiply the base rates by your payroll.
It’s possible that you can lower your premiums by keeping accidents and claims to a minimum. North Dakota also offers a couple of discount programs for businesses that stay claim-free:
Here are just a few base rate examples for different class codes for 2016.
0251 Irrigation $5.02
1005 Coal Mining $1.85
1320 Oil or Gas Operations $4.04
1463 Briquette and Clay Products Mfg. $3.48
2000 Bakeries $2.16
2014 Food Processing $3.82
2030 Sugar Mfg. and Refining $3.02
2041 Food Preparation - Nonretail $2.56
2064 Creameries and Dairy Products Mfg. $7.74
These premium rates are applied to every $100 of wages for each employee.
North Dakota offers experience modifiers, which are also know as e-mods. These can lower or raise your workers’ compensation premium depending on your claims experience. E-mod programs are designed to reward employers who have fewer accidents and claims, and punish businesses that have more accidents and claims.
The North Dakota e-mod program works like this: Your business is compared to other businesses in your industry that are roughly the same size. If you have a higher accident and claim record than the other businesses, you will be issue a debit e-mod, which will raise your premium rates. If your business has a lower accident and claim rate, you will get a credit e-mod that will lower your premium rate.
Businesses that are new to the e-mod program are given a rating of 1.00, which is considered neutral. If you maintain a low accident and claim rate, your e-mod number will drop below 1.00, lowering your premium. If you have a bad year for accidents and claims, your number will go above 1.00, which will push your rates up.
Once you have established an e-mod number, your workers' comp premium is calculated by multiplying your base rate by your e-mod and then your total payroll.
Your e-mod number is the one factor that you have direct control over when it comes to your workers’ compensation premium. Implementing safety programs and limiting accidents and claims can help lower your workers’ compensation costs. In most cases, numerous small claims will impact your premium more than one large claim.
Even though North Dakota does not allow private insurers to operate in the state, talking with an insurance professional is still a sound idea. A Trusted Choice® agent can explain the North Dakota workers’ compensation program to you, help you find the right policy and get your business on track to qualify for the discounts offered by the North Dakota program.
Get started right now by contacting a Trusted Choice agent.