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What type of insurance do you need?
If an employee is injured in the workplace, the costs for necessary medical treatment and lost wages can add up quickly. Workers’ compensation insurance protects both your business and your employees by offering benefits to injured workers while reducing the chance that your business will need to deal with expensive lawsuits.
In Tennessee, every employer in the construction and coal mining business must carry workers’ compensation for all workers, including subcontractors.
All other businesses are required by law to have workers' compensation if they employ five or more workers. Family members, part-time employees, and corporate officers must be included when determining the number of employees.
It is not necessary to purchase coverage for sole proprietors, LLC members, corporate officers, or partners. However, you may buy coverage for these workers if you wish.
In Tennessee, a workers’ compensation policy can be purchased through any of a number of commercial insurance companies that offer this coverage.
These companies must adhere to the rates for each job classification that are published annually by the Workers’ Compensation Division of the Tennessee Department of Labor and Workforce Development. Because commercial providers are permitted by the state to offer policy discounts of up to 25%, comparing rates can save you money.
Additionally, Tennessee businesses are given the option to self-insure. To do so, a company must demonstrate the financial strength necessary to self-insure, and must obtain approval from the Tennessee Department of Commerce and Insurance.
In this state, workers’ compensation premiums are calculated according to how many employees a business has, the types of jobs these workers do, the company’s overall annual payroll, and the employer’s history of accidents and workers’ compensation claims.
In general, if you have workers who do jobs that involve higher risks of suffering serious injuries, you can expect to pay more for workers’ compensation insurance for them in Tennessee.
Every year, the Workers’ Compensation Division of the Tennessee Department of Labor and Workforce Development publishes assigned rates for every job classification. Insurance companies must adhere to these rates when determining costs, though they are permitted to offer policy discounts when appropriate.
Every occupation is assigned a specific classification code. You would need to find the classification codes for all the jobs your employees do.
The Tennessee Workers’ Compensation Division assigns base rates for each of these class codes according to the overall injury risks associated with these jobs.
The base rate is used as part of a formula that determines an employer’s annual workers’ compensation premium.
Example Based on $100,000 in Annual Payroll
Established employers can get lower rates if they have a solid safety rating. This is known as an experience modifier-based discount.
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, depending on your company’s claims history.
Your experience modification is a numerical representation of your actual losses compared with expected losses for businesses in your industry (roofing companies are compared with other roofing companies; restaurants are compared with other similar-style restaurants, etc.)
The mod is applied to the Tennessee workers’ compensation premium as a debit or credit.
Experience-rated premium calculation:
Tennessee employers are eligible to receive an experience modification rating (EMR) when they meet one of the following requirements:
Are you looking for a great workers’ compensation insurance policy to cover your Tennessee business? An independent insurance agent can help. These agents can help you review rates and offerings from a variety of insurance companies so that you can choose the coverage that offers the most value to your company.
Your local agent can also help you evaluate your risk management techniques and find new programs and solutions to keep your workers’ compensation insurance costs down over the long term.
Healthcare $1,825 Per $100,000 payroll
Retail Trade $2,850 Per $100,000 payroll
Construction $7,430 Per $100,000 payroll