What is in a Work Comp Policy

What's in a Workers' Compensation Policy?

(And how do you get one?)

What is in a workers comp policy

Wondering about workers' compensation insurance and exactly what it  covers? Well, look no further. That is the topic that will be discussed, so when you are finished reading you will have the knowledge to make an educated decision.

Working together with your independent insurance agent will seal the deal on the best coverage and rates on the market. They are licensed and trained in all things workers' compensation and commercial insurance. 

What Is Workers' Compensation Insurance?

Workers' compensation insurance is a policy purchased by the employer or subcontractor that provides coverage for medical expenses and regular pay when an employee or subcontractor gets injured on the job. 

Most states require employers to obtain some form of workers' compensation insurance to better protect themselves and their employees. Check with your local independent insurance agent for your state specifics.

The Workers' Compensation Breakdown

Now that you know what a workers' compensation policy is, learning how it works and when coverages apply is next. 

The breakdown:

Step 1 | Industry Type:
Each workers' compensation insurance company has a different appetite when it comes to types of businesses and industries they will write coverage for. Some companies have a more comprehensive approach while others narrow in on one specific industry. Knowing which carrier is right for your business should be discussed and determined with your independent insurance agent.
Step 2 | Classification aka Class Codes:
Next, your independent insurance agent will work with you and the insurance carriers to determine what class code your employees need to be rated under. A class code is a four-digit numeric code that is assigned to each employee job type and will aid in determining the overall rate. The riskier the job duties, the more premium will be charged to accommodate for that risk.
Step 3 | Experience  Modification Rating aka MOD:
If you have a MOD, then this will help the insurance company determine your premiums. MODs go up or down based on your claims frequency and longevity. Basically, it's a scorecard for your business. You will not be assigned a MOD unless you have had a minimum of three years of workers' compensation insurance and your annual premiums are $5,000 or more. If you're in the dark about whether this applies to your business, just ask your independent insurance agent. They know what to do. 
Step 4 | Safety Factors:
Having a culture of safety when it comes to your business is just plain good sense. Things like mandatory safety training for employees and having a designated safety manager wins points with your insurance company. They love it when you minimize their risk by being proactive and safe. Your independent insurance agent has a vast roster of safety implementation training and is what your workers' compensation insurance company will like to see in order to give you a discounted rate. 
Step 5 | Premiums: 
Last on the list is premiums. As a conscientious business owner, you want to know what a workers' compensation policy will cost you. Well, each industry is different and each company has its own individual risk factors that make up their premiums. And as sands through the hourglass, so go the premiums of your worker's compensation policy. Not to fear, your independent insurance agent can run rates with multiple insurance companies that specialize in your business type. 
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What Exactly Will Your Worker's Compensation Policy Cover?

Pretty simply, your worker's compensation policy will cover injuries sustained on the job or as a result of doing work and regular pay. 

This coverage will apply to employees, subcontractors, and the employers if they do not exclude themselves from their policies. It will pay for medical expenses such as doctor's visits including but not limited to:

  • Medical doctors
  • Chiropractors
  • Psychiatrists
  • Physical Therapists

It will even provide coverage for death and dismemberment and mental illness as long as it can be proven that it was a result of problematic working conditions or the work environment. 

To include or exclude: 

Should an owner, member, or executive include or exclude themselves on their own worker's compensation policy? The choice is up to you. 

A lot of owners do not want to pay the additional premium that is associated with their payroll, which is how workers' compensation premium is calculated (among other factors). 

Thus, they exclude themselves from the policy altogether and become responsible for their own medical expenses should an injury result out of running their business.

You can, on the other hand, be included in your workers' compensation policy for your business and include your payroll. The insurance company will want to make sure you have your own health insurance and see proof that it's active. 

The choice is yours, but it's best discussed with your independent insurance agent to be sure you are making the right decision for you and your company. 

Claims Process 

The claims process for a workers' compensation policy is fairly simple. When you, an employee, or subcontractor gets injured while on the job, they can file a claim to pay for medical expenses and regular pay as a result of being injured. 

An adjuster will be assigned to determine if the claim is valid and then turn it over to the insurance company. The insurance company will pay out any legitimate claim for as long as the policy allows and the party is injured. 

One thing to note is that your insurance premiums as an owner do not increase because of the frequency of workers' compensation claims, but rather the length that each claim stays open for. 

If you have an employee who needs to stay on workers' compensation coverage for a longer period of time, then the chances that the claim will move into full-time disability is high. 

Getting your employees back to work, even if its light-duty work until they can fully recover, is better for all involved. 

Following the physician's orders and working closely with the doctors, employee, and insurance company is going to keep a clear form of communication going and ultimately end in a much better outcome. 

Common workers' comp claims

Benefits Of Working with an Independent Insurance Agent

The benefits of working with an independent insurance agent are vast. Having someone to find you the best rates, coverage, and claims processing are pretty big deals and should be carefully considered. 

Going willy-nilly on workers' compensation insurance will only hurt in the long run. Best get it right the first go-around. 

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