Your quote is based on several common factors to give you a clear picture of the cost you can expect, though an independent agent can shop around and maybe even improve your rate!
NOTE: This quote is not final, though we did work with professional actuaries to help get you a ballpark figure to get started.
Workers' compensation insurance helps protect you and your employees if a job-related incident leaves them injured or ill. One of the most important coverages a business can have, workers' comp financially covers employees' medical bills after an accident, replaces wages from lost work time, and even protects a business owner from being sued or paying expenses out of pocket.
In most cases, workers' comp insurance will pay 66% of lost wages while injured, but most importantly, your medical bills will be covered as they come flooding in after an injury. Every state has different laws when it comes to workers' comp, including when it's necessary and how it's paid out, and an independent agent can help you understand how it all applies to your business more clearly.
Any employee who is hurt on the job or as a result of doing work for your business can file a workers' comp claim against the policy. An insurance adjuster will then be assigned to check the validity of the event and report back to the insurance company for a final decision.
As long as the employer is properly covered with a workers' comp policy, the employee can file a claim against it. Once that has been done, an adjuster will be assigned to investigate the event and report back to the insurance company. A final decision will be determined and, if legitimate, medical expenses will be paid for and reimbursed according to the terms laid out.
Each state has its own laws that regulate and govern workers' comp, but in most cases workers' comp is mandatory for certain types and sizes of businesses (typically between one and five employees).
Most states don’t require sole proprietors or partnerships to have workers' comp if they don’t have any employees. Though once a business begins to hire employees, they may be required to buy workers' comp.
As you can probably guess, workers' comp isn't just a one-cost-for-all type of coverage. Costs vary quite a bit with a number of different factors that come together to determine your premium, including the state your business operates in, the size, and of course the industry.
So, a large roofing contracting company will pay quite a bit more for workers' comp than a small accounting firm. Premiums for a small beauty salon could be a few hundred dollars a year, while a large manufacturing company could pay hundreds of thousands of dollars each year.
Aboslutely. With workers' comp, ANY type of work-related illness or injury may entitle you to receive benefits. This includes emotional and/or mental stress injuries that a worker suffers as a result of their job.
Safety, safety, safety. Since workers' comp is protection from injuries, the best way to lower your risk is to be as safe as humanly possible. This should be one of your highest business priorities. A company culture of safety with common safety meetings, seminars, and proper precaution installation will show the insurance company you mean business. They will typically give you a more favorable rate because you are minimizing their risk by being proactive and they will thank you.
Independent contractors are typically not considered employees — unless they don’t have their own workers' comp insurance. If there is a workplace injury with a contractor or subcontractor who doesn’t have their own workers' comp insurance, the client and/or general contractor could be liable for their workplace injuries.
With access to multiple insurance companies, independent insurance agents are unlike any other type of agent out there. They’ll help find you the best coverage options and most competitive prices, all for free. To find a local independent insurance agent, click here.
WORKERS COMPENSATION INSURANCE
Find the perfect agent to shop multiple insurance companies on your behalf, saving you time and money.
Every business comes with its own share of risk. It doesn't matter if you're running a large fireworks warehouse or a small bubble wrap shop, accidents happen in all shapes and sizes. As a business owner, having the right workers' comp policy in place is an important piece of protection for the employees who help you keep your operation running. But what is workers' comp and where do you start?
An independent insurance agent can help you understand your business insurance needs and help you find the best workers' compensation option for you, your employees, and your budget.
What Is Workers’ Compensation Insurance?
Workers’ compensation is a very important type of business insurance that not only covers employees’ workplace injuries, but also prevents them from suing their employers after an accident or illness.
Workers' comp is a fairly comprehensive form of insurance protection. In addition to paying an injured employee’s medical bills, it can also pay rehabilitation costs, lost wages, disability benefits, funeral expenses, and even death benefits. However, it will only pay for those extra expenses if they’re directly caused by the workplace injury.
Another important thing to know about workers' comp, is that it's considered a no-fault insurance. This means it will pay the benefit no matter who is at fault for the accident—as long as it wasn’t intentional.
Is Workers’ Compensation Insurance Mandatory?
Workers' comp, among a few other types of insurance, is regulated at the state level. Each state has its own set of workers' comp laws that regulate and govern it, with certain regulations depending on the type and size of the business.
One of the biggest differences between states is the number of employees that make workers' compensation required. If you're a sole proprietor or partnership, most states don’t require workers' comp. However, once a business begins to hire employees, they’re typically required to provide workers' comp—depending on the state, this can vary between one and five employees.
When it comes to independent contractors, they're typically not considered employees — unless they don’t have their own workers' comp insurance. If there is a workplace injury with a contractor or subcontractor who doesn’t have their own coverage, the client and/or general contractor could be liable for their workplace injuries.
The most common workers' comp claims include:
What Does Workers’ Comp Cover?
Workers' compensation covers nearly all workplace injuries, as long as they're declared accidental. The full definition is fairly broad, however, with generic wording that defines what’s covered as “injuries sustained during the course and scope of employment.”
There could be some gray areas in what that means exactly. For example, if you slip and fall in the parking lot on your way into work, that could be considered a workers' comp claim, though some states have stricter guidelines than others.
Workers' Comp Insurance Benefits
If there is a workers' comp claim, the insurer will pay all related medical costs related to the injury and include rehabilitation expenses and compensation for lost wages while the employee is unable to work. As you can imagine, in the case of a serious long-term injury, lost wages can be paid out all the way to retirement.
Of course, the exact amount that’s paid out in lost wages depends entirely on whether the disability is declared total or partial, and permanent or temporary.
In more serious circumstances, if the workplace injury leads to death, workers' comp will also pay for funeral/burial expenses, and even pay out a death benefit based on lost wages, similar in some ways to an employer-based life insurance policy.
Why Do I Need Workers’ Comp?
There are a handful of reasons why having workers' comp is important for a business owner, but these two are the most important.
You’ll have insurance protection to cover the cost of any injuries sustained by your employees. As you can imagine, even one serious injury could cost in the hundreds of thousands of dollars.
Having a workers' comp policy in place means that your employees are forfeiting their right to sue you for a workplace injury. Those lawsuit expenses typically cost more than simply paying the medical bills.
So, for employees, a workers' compensation policy guarantees they'll be paid fairly for injuries sustained on the job. As for employers, they can provide financial help to injured employees, enjoy a fixed cost, and won’t face lawsuits for workplace injuries.
Top Workers' Comp Stats You Need to Know
It’s important to note, however, that employees can still sue employers for other types of workplace events, including harassment, bullying, discrimination, etc.
If a business chooses not to carry workers' comp, it could face a number of consequences, such as the following.
Criminal charges: If a business is required to carry workers' comp and doesn’t, it could be shut down, heavily fined, and possibly faced with jail time for breaking the law.
Legal costs: Without workers' comp coverage, businesses would face the full legal costs of any lawsuits brought against them.
Financial ruin: Without workers' comp coverage, businesses would face the full cost of any workplace injuries, lost wages, and lawsuits, which could easily put a company out of business.
Workers’ Compensation Laws by State
As mentioned, each state has its own laws and regulations for workers' compensation insurance, including the following.
Size and type of businesses that require it
What type of injuries are covered
How long benefits are to be paid
If the state offers workers' comp by itself or allows private insurance companies to offer it
This also means your coverage needs vary by state, and if you run a multi-state business, you'll likely need to buy a separate workers' compensation policy for each state you operate in.
One solution to this multi-state problem is to buy a workers' comp policy that applies to all states, though these policies aren’t available in every industry and can often be much more expensive.
How Much Does Workers’ Compensation Cost?
Workers' comp costs vary widely, with three main factors affecting your premium.
The state your business operates in
The size of your business
The industry your business is in
As you can guess, a large roofing contracting companies will pay much, much more for a workers' comp than a large accounting firm. Premiums for a solo hair stylist could be a few hundred dollars a year, while a large manufacturer could pay hundreds of thousands of dollars each year.
Another factor that affects workers' comp premium is your workers' comp claims history, also known as an experience modifier, or just a 'mod' for short. A business’s experience mod is a formula that determines whether a particular business has had above or below average workers' comp claims compared to other businesses in its industry.
The number that’s used as the industry average is 1.00, with a number lower than 1.00 meaning fewer claims than average and a lower rate. Numbers higher than 1.00 mean higher than average claims and a higher rate.
How Can You Get Lower Workers’ Comp Insurance Rates?
There are three key things you can do to lower your workers' comp rates, though it typically takes at least one year, if not three to five years, to earn a better claims history with a lower rate.
Ensure your workplace is a safe environment: Lower risks mean lower premiums, so use signs if there's a wet floor, make sure there are proper railings in place on any steps, and don’t leave any dangerous tools or materials in areas that could cause injuries.
Raise your workers' comp deductible: You could raise your workers' comp deductible to a higher number, such as $5,000 or so. While this would mean you would have to pay for injuries under your deductible amount, it would also help reduce the number of claims you have.
Lower your experience mod: Having fewer claims with low dollar amounts will help your claims history. Having a better than average workers' comp mod can give you better rates, but insurers will want to see more than one year of your claims history.
Your Independent Insurance Agent Has Your Answers
Whatever you need, your agent has your back. With a brief intro into the terms, discounts and process of your workers' comp insurance, you know the kinds of questions to be asking. Your agent will ask you all about your business, its employees, and your goals to help find the perfect blend of coverage at the right cost for you.
Best Workers Compensation Insurance Companies
Our independent insurance agents work for you, not the insurance companies. That means you always get the best coverage options to choose from.
When you have options from multiple companies, it's easier to find the best coverage at the right price, at no extra cost to you.
There's an independent agent in every city who always understands the insurance coverage you need most based on local laws and needs that apply to you.
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