In June 2016, workers with Engelberth Construction Inc. were building a new residence hall on the University of Vermont’s central campus. One worker, a 61-year-old man, was killed when he fell from scaffolding from a height of about 75 feet. Though Engelberth had prided itself on its outstanding safety record, accidents in the construction industry are sometimes unavoidable, and this company had to endure the pain of losing a valued worker. Fortunately, because the company carried a Vermont workers’ compensation policy, this employee’s family members were able to receive some compensation for their loss.
Construction companies are not the only businesses that need to worry about worker injuries. From cuts that require stitches, to lung diseases caused by long-term exposure to hazardous fumes, to carpal tunnel syndrome, worker injuries can affect businesses of all types. As a business owner, you are responsible for covering your employees against the losses associated with these injuries. A solid Vermont workmans' comp policy will ensure that your employees are taken care of while protecting your business from large financial losses.
What Are Vermont's Workers’ Compensation Laws?
Vermont's workers’ compensation laws require that all employers within this state’s borders carry workmans' comp coverage, regardless of the size of the business or the number of employees. Certain types of employees are excluded from the need for coverage. These include:
- Sole proprietors or partners of unincorporated businesses
- Independent contractors defined as “a person whose employment is of a casual nature, and not for the purpose of the employer’s trade or business.”
- Amateur sports players
- Those who work in agricultural or farm employment for someone whose aggregate payroll is less than $10,000 in a calendar year
- Certain elected officials
Failure to carry Vermont workers’ compensation insurance that meets the state’s requirements can put your business at risk for expensive lawsuits if a worker is injured. Additionally, if the state discovers that you are running a business without this insurance, they can close your company down.
How Does Vermont Workers' Compensation Work?
What Is Covered?
Workers’ compensation policies are designed to cover the costs related to occupational injuries and illnesses, regardless of fault. Related expenses can include medical treatment, lost wages, long-term disability, long-term care, and, in the most extreme cases, death benefits for family members.
These policies can cover immediate injuries, such as the Engelberth Construction employee’s fall, and injuries that occur over a long period, such as carpal tunnel syndrome, repetitive stress injuries, and illnesses resulting from long-term exposure to toxic chemicals.
There are cases in which an employee’s claim may be denied by the insurance company. Reasons typically include instances where the injured employee was under the influence of drugs or alcohol at the time of the accident, the injury occurred while the employee was in the act of committing a felony, or the injuries sustained by the employee were self-inflicted. If a worker’s claim is denied, they have the right to appeal the decision with the Vermont Workers’ Compensation Appeals Board.
Who Is Covered?
Vermont workmans' comp insurance has benefits for both your business interests and your employees. Your workers do not need to worry that a work accident will cause them or their families unmanageable financial difficulties; and, as a business owner, can have peace of mind knowing that if an accident does occur, your company is not likely to be faced with an expensive liability lawsuit. This is because when an employee or their family members accept a settlement from your insurance company, they forfeit their right to sue your business for negligence related to the injury.
Most occupational injuries are minor and the affected employees are able to resume their normal job duties within a day or two. Serious injuries that require extensive medical care, on the other hand, can be extremely expensive. This is because in addition to medical costs, your employee is entitled to lost wages, long-term disability, and/or other miscellaneous coverage. When a work accident results in a fatality, like the one that killed the construction worker at the University of Vermont, the costs can be very high. Often, family members are entitled to collect the wages that the employee could have earned in the future had the accident not occurred.
Where Can Vermont Business Owners Buy Coverage?
Vermont has a private market for workers' compensation coverage. Business owners can buy their policies from any of the private insurance carriers that are licensed to provide this coverage in this state.
Some businesses, however, may find it difficult or impossible to find a private insurance carrier who is willing to insure them. This may be because the company has a bad history of employee injuries or it may be because it is a company in a dangerous industry that has not yet established a history. Because workers’ compensation insurance is mandatory, those who cannot get coverage on the private market are placed in what is known as the assigned risk market, or pool. These businesses can still get coverage through the state, but they can expect to pay significantly more for it.
Independent insurance professionals can help you get the coverage you need and can advise you on the steps to take to get out of the assigned risk market if your business is among those high-risk companies that are part of the pool.
How Much Does Vermont Workmans' Comp Cost?
Vermont workmans' comp premiums are calculated using a state-wide standard. Your costs will be determined by your company’s annual payroll amount, the type of business you operate, and your company’s history of work-related accidents and illnesses, as indicated by your experience modification factor or, for smaller companies, your merit rating.
It is worth noting that in the state of Vermont there is a minimum amount that companies are expected to pay for workers’ compensation insurance. This established minimum premium varies according to the industry in which your business operates. Those with the least risk will pay a minimum of $218 per year, while those with the highest risk can expect a minimum premium of $750 per year. The companies that pay these minimum rates are typically those with only one or two employees.
Vermont Workers’ Compensation 2016 Base Rate Examples
Vermont bases its workers’ compensation rates on NCCI guidelines, and assigns a minimum and maximum rate for each industry classification.
Here are some sample base rates (rate per $100 of employer payroll) as of April 1, 2016.. These rates are updated annually and could go up or down, depending on rates of worker injuries in each industry within the state.
- 0042 Landscaping: $12.95
- 5183 Plumbing: $6.71
- 5645 Residential Construction/Carpentry: $13.85
- 8017 Retail Store: $2.21
- 8810 Clerical: $0.36
- 9082 Restaurant: $2.46
As should be expected, it costs far less to insure office workers in clerical positions than it is does to cover workers in the construction and landscaping industries, because they are far more likely to experience serious injuries on the job.
What Is an Experience Rating and How Does It Influence Costs?
In this state, many companies are assigned an experience modification factor, or experience mod, and this rating can affect their Vermont workers’ compensation insurance rates.
Your experience mod gives insurance companies an indication of how your company's actual losses compare to expected losses for other businesses of your size within your industry. A higher rating will result in higher premium rates.
Experience mod eligibility rating requirements vary by state. In Vermont, businesses qualify to be experience-rated if they pay at least $4,000 in policy premiums annually.
As of 2003, any businesses that pay less than $4,000 for Vermont workmans' compensation premiums and do not qualify for an experience mod rating can be assigned a merit rating. Merit ratings can enable these smaller businesses to receive up to a 5% credit or debit on their premiums, based on their performance over the previous three years.
If your Vermont workmans' comp policy is experience-rated, your premiums are determined with the following formula:
- (Base Rate) X (Payroll) X (Experience Mod) = Premium
Your mod rating is applied to your workers’ compensation base premium and can raise or lower what you owe. This works as follows:
- A mod of 1.0 is average: A company with a 1.0 mod rating will not have their premium rate affected. All businesses are initially assigned a mod of 1.0.
- A mod greater than 1.0: This is a debit mod. This indicates that your losses were worse than expected, and your base rate will be increased.
- A mod less than 1.0: This is a credit mod. This indicates that your losses were better than expected, and your base rate will be decreased.
Here are some examples of how your experience rating can affect your Vermont workers’ compensation premiums:
- Premium: $100,000
- Mod: 0.85 (15% premium credit)
- Premium with mod credit applied: $85,000
- Premium: $100,000
- Mod: 1.0
- Premium is not adjusted: $100,000
- Premium: $100,000
- Mod: 1.15 (15% premium surcharge/debit)
- Premium with mod debit applied: $115,000
The best way to keep your Vermont workers’ compensation rates on the low end of the scale is by maintaining a solid safety record. A good insurance company will be just as invested in protecting your workers as you are, and will be able to assist you in this effort by providing valuable resources and guidelines related to safety protocols. An independent insurance agent can help you find a reputable provider that is suitable to meet the needs of your business.
Get Help Securing a Vermont Workers’ Comp Policy
Employers owe it to their workers to cover the costs associated with work-related accidents and injuries. Although most workers' comp claims are for minor, easily treatable injuries, others, like the tragedy at the University of Vermont, can be very expensive to cover. That is why employers should always be prepared to handle the costs associated with the worst possible scenario. Vermont workers' compensation insurance can offer your business the best line of defense in this instance.
It is easy to find a local Trusted Choice® agent who is well-versed in the many aspects of business insurance. These independent insurance agents are familiar with Vermont workers’ compensation laws and will be able to ensure that your business is in compliance with them. These agents can also help you review policies and quotes from a selection of reputable insurance companies so that you can make a well-informed decision about which policy to purchase. Find an agent near you to learn more.