Work-related accidents that lead to injuries and occasional fatalities are unfortunate. Many of these calamities are preventable through maintenance of proper safety protocols, while others are simply tragic accidents under unforeseen circumstances. Either way, employees and their families can expect to receive compensation for their financial losses through workman’s compensation payments. As an employer, it is important that you understand Virginia workers' compensation insurance so that you can ensure that your employees are covered and that your business is in compliance with state laws.
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What Are Virginia Workers' Compensation Laws?
In Virginia, all business with three or more employees, whether they are full-time or part-time workers, are required to cover these workers with a Virginia workmans' comp policy. Companies that hire subcontractors must include these workers in their employee count. If you are a sole proprietor, a partner, or a member of an LLC, you do not need to include yourself in your employee count or your coverage, though it may be in your best interest to do so.
Failure to carry this coverage can result in expensive fines. The state actually increased the penalties in 2014, so that now, companies that are not in compliance are subjected to a penalty of up to $250 per day, with a maximum penalty of $50,000. It is a good idea to work with a knowledgeable insurance agent if you have questions about your particular company’s coverage requirements.
The Basics of Virginia Workers' Compensation
What Is Covered?
Virginia workmans' comp insurance is designed to cover businesses against the costs related to injuries or illnesses sustained by workers while on the job, regardless of fault. This often includes coverage for medical treatment, lost wages, long-term disability, and death benefits for family members if a work-related illness or injury proves fatal.
These policies cover a wide range of work-related mishaps. From immediate injuries resulting from on-the-job accidents to injuries or illnesses that may result from long-term exposure to chemicals, radiation, or repetitive motion, these policies protect your company from lawsuits that may arise because of these damages.
What Is Not Covered?
Most Virginia workmen compensation insurance policies exclude certain types of injuries from coverage. Providers may opt to deny claims for situations in which:
- An employee is injured while working under the influence of drugs or alcohol
- An employee is injured while in the act of committing a felony
- An injury resulted because of employee actions that were in direct violation of documented company policy
- An employee’s injuries were self-inflicted
If a claim is denied for these or any other reasons, employees can file an appeal through the Virginia Workers’ Compensation Commission.
Who Is Covered?
Workers' compensation policies are designed to protect all the workers your business employs. Independent contractors are frequently exempt. These policies also serve to protect your business, because when workers accept the coverage offered by your Virginia worker’s compensation policy, they forfeit their right to sue your company for negligence in relation to the accident. Fatal work injuries can be particularly expensive to cover, which is why coverage is of vital importance to companies in high-risk industries such as construction and roofing.
In the case of the Reinhart Foods accident, the worker who died was only 21 years old. He still had a lifetime of earning potential ahead of him, and his family is entitled to be compensated for this substantial loss.
Where Can You Buy Coverage?
The National Council on Compensation Insurance (NCCI) is an independent not-for-profit corporation that standardizes how workmans' compensation rates are calculated. Virginia is an NCCI state. Employers in Virginia can obtain coverage in one of four ways:
- They can buy it through a commercial insurer
- They can serve as an authorized self-insurer
- They can participate in a licensed group self-insurance association
- They can purchase it through a registered professional employer organization
If, like most employers, you choose to purchase your coverage through a commercial insurer, independent insurance professionals can help you get the coverage you need while ensuring that you get the discounts for which your business qualifies. Experienced agents who are familiar with the nuances of commercial insurance can match you up with a Virginia workers' compensation company that understands the needs of businesses in your industry.
How Much Does Virginia Workmans' Comp Cost?
Insurance providers calculate the cost of Virginia workers' comp policies using a standard calculation that is based on state-wide industry rates. Your assigned cost will be based on:
- the industry (or industries) in which your business operates, and the risks associated with the work your employees do;
- your company’s total annual payroll amount; and
- your company's assessed risk as it compares to other similarly sized businesses in its industry.
An experienced insurance agent can help you find ways to qualify for policy discounts, and can help you find a Virginia workers' compensation provider that is best able to handle the specific needs of businesses in your industry. Good insurance companies will often provide your business with information about safety protocols and a variety of tips and resources to help you ensure that your company meets all OSHA requirements so that you can best protect your employees from work-related injuries.
Virginia Workers’ Compensation 2016 Base Rate Examples
Virginia bases its workers' compensation rates on NCCI guidelines. The state assigns a minimum and maximum rate for each industry classification.
Here are some sample base rates (rate per $100 of employer payroll) from the Virginia State Corporation Commission as of April 1, 2016. Keep in mind that these rates are updated each year and could go up or down, depending on the rate of worker injuries in each particular industry.
- 0042 Landscaping: $6.78
- 5183 Plumbing: $4.65
- 5645 Carpentry/Construction: $14.88
- 8017 Retail Store: $1.91
- 8810 Clerical: $0.14
- 9082 Restaurant: $1.62
As can be expected, it costs much less to insure workers in clerical positions than to cover those who work in more dangerous jobs like carpentry and construction. This is because the injuries sustained by construction workers tend to be far more serious in nature, and therefore, more expensive to cover.
How Your Company's Experience Rating Influences Your Costs
In Virginia, companies that meet certain qualifications are assigned an experience modification factor, or experience mod. This rating can affect your Virginia workers' compensation insurance rates in a positive or negative way. It gives insurance companies insight into how your particular company’s worker-injury risk compares to similarly sized businesses in your industry.
Experience mod eligibility rating requirements vary by state. Most, but not all, businesses in Virginia qualify to be experience-rated; employers will receive an experience modification rating if one or both of the following are true:
- $7,000 in policy premium is generated during the last year or last two years, or
- $3,500 is the average policy premium generated for more than two years
If your Virginia workman’s comp policy is experience-rated, your premiums will be determined using the following formula:
- (Base Rate) X (Payroll) X (Experience Mod) = (Premium Rate)
All businesses start off with an experience mod of 1.0. When your company's work-related injuries are lower than expected, your mod will go down; likewise, when your company experiences a higher number of injuries or particularly significant injuries, the rating goes up. Your assessed mod rating represents either a debit or credit, which is then applied to your workers’ compensation base premium. This works as follows:
- A mod of 1.0 denotes average risk: This rating will not affect your cost for coverage. All employers start out with a mod of 1.0.
- A mod that is greater than 1.0 is a debit mod. A rating higher than 1.0 indicates that your company’s injury-related losses were worse than expected. This higher rating will result in your base rate being raised accordingly.
- A mod that is less than 1.0 is a credit mod. A rating lower than 1.0 indicates that your company’s injury-related losses were better than expected. This lower rating will result in your base rate being discounted.
Below are some examples of how your experience rating might affect your Virginia workers’ compensation premiums:
- Premium: $100,000
- Mod: 0.70 (30% premium credit)
- Premium with mod credit applied: $70,000
- Premium: $100,000
- Mod: 1.0
- Premium is not adjusted
- Premium: $100,000
- Mod: 1.30 (30% premium surcharge/debit)
- Premium with mod debit applied: $130,000
You can take measures to keep your workers’ compensation rates on the low end by following safe practices within your company. Naturally, your Virginia workmans' compensation insurance provider will be as interested in maintaining your workers’ safety as you are. Because many of these providers cater to companies in specific industries, they can often offer a wealth of information related to workplace safety. It is possible that your Virginia workers' compensation insurance company will require your business to adhere to specific safety protocols. In this case, failure to meet these requirements may result in the cancellation of your policy.
Get Help Securing a Suitable Virginia Workers’ Comp Policy
Accidents like shelving collapses are rare; however, as the Manassas tragedy shows, they can happen. Employers should be prepared to handle the associated costs of any kind of work-related injury, no matter how unlikely it may seem. That is why it is so important to find a workers' compensation package that is appropriate to meet the needs of your business. A company that specializes in covering construction workers, for example, may not be the best company to use to cover the workers in your retail establishment.
It is easy to find a local Trusted Choice® agent who handles all aspects of commercial insurance. These independent agents are well-versed in Virginia workers' compensation laws, and they can help match you up with the best insurance companies to meet your needs. Find an agent near you to learn more and review quotes for covering your business with Virginia workers' compensation insurance.