Nearly one in five small business owners must purchase workers’ compensation insurance. But shopping for coverage can be overwhelming.
Understanding how to correctly shop for workers’ comp can save time, money, and stress. Read on to learn about workers’ comp insurance and get started today.
Know Your Coverage Needs
Whether you’re just starting or have been in business for decades, purchasing workers’ compensation insurance is essential to running your business. It protects your employees in the event of an injury or illness, and it also helps to protect your bottom line from potential employee lawsuits.
The first step in the process of purchasing workers’ comp is to know your coverage needs. This includes understanding your state’s law’s specific requirements and industry. It also includes learning what factors are likely to impact your premium.
Workers’ comp rates depend on various factors, including your state’s laws, industry, and claims history. Your insurance agent will be able to help you understand these factors and find the right workers’ compensation policy for your business.
For example, in Texas, the cost of workers’ comp for every $100 of payroll ranges from 75 cents to $2.74 per $100 of payroll, according to Insureon. This varies by location, industry, job type, and experience modification rate (EMR), which is calculated and applied by the National Council on Compensation Insurance.
Insureon has partnered with leading insurance carriers to provide businesses with free quotes for workers’ comp insurance from leading U.S. companies. It’s as easy as completing a quick online quote form.
Know Your State’s Laws
Most states require employers to carry workers’ compensation insurance for their employees. This includes most private businesses that hire employees, sole proprietors, partnerships, and corporations.
State laws about workers’ comp vary widely, so research your specific state’s requirements for coverage to ensure you have the right type of policy. This can include a Businessowners Policy (BOP) or a stand-alone policy that you purchase directly from an insurer.
One way to determine your state’s laws is to browse the table of contents on an online collection of statutes, which will give you a general overview of the law. Many of these collections have cross-references to other regulations and sections, so you can find the exact information you need.
Unlike health insurance, workers’ comp coverage doesn’t have a ceiling on the amount of money you can claim. The amount you get will depend on your state’s statutory requirements and the nature of your injury.
In addition to covering a worker’s medical expenses, most states offer income replacement benefits for any permanent disability or death from work-related injuries. These can be weekly payments or lump-sum amounts. In most cases, they are equal to a percentage of the worker’s average wages or weekly earnings. Eligible family members can also receive a lump-sum benefit for funeral expenses.
Know Your Coverage Options
An accurate understanding of the available coverage options can help you purchase the right policy for your needs. An insurance agent that knows your state’s workers’ compensation system is best suited to help you identify your exact coverage needs and find a policy that works for you.
Premiums for workers’ compensation policies are based on several factors, including industry category, experience rating, and location. Areas at risk of natural or artificial disasters are considered a higher risk, so businesses in these areas may pay higher premiums.
Remember that most states also require employers to have an optional medical deductible as part of their policy. This deductible is designed to encourage greater safety consciousness among employers, and it can lower premiums for many companies.
Coverage is not required for sole proprietors who don’t have employees or businesses that aren’t regularly hiring full-time or part-time workers. However, these businesses should be aware that they are liable for damages for injuries to their employees if they don’t have workers’ compensation insurance.
Workers’ compensation policies are broken down into “Part One” and “Part Two.” Under “Part One,” the insurer contracts to pay the statutory amount of any work-related bodily injury or illness. This amount includes partial wage replacement, medical treatment, and other costs.
Know Your Insurance Agent
Your independent agent is a valuable resource for your insurance needs, especially since they live and work in the same community as you. They can offer more personalized guidance than an 800-number or website can.
The best agents are eager to learn new products and understand their clients’ financial situations. They also keep up with tax and other legal aspects that can impact their policies.
They know your state’s laws and regulations and can help you find the right coverage for your business, including workers’ compensation insurance.
You can save money and time by working with an insurance agent who knows your state’s workers’ compensation system. They can help you figure out which employees should be covered under your policy and ensure you comply with all of the necessary guidelines.
For example, they’ll know if you should pay premiums based on the total annual payroll of all your employees or if you can pay a per-employee rate for each. They’ll be able to tell you how much income replacement benefit should be paid if your employee becomes disabled.
A good worker’s comp policy will also include optional medical deductibles. These are cost-saving measure that encourages companies to take steps to reduce workplace injuries. They’re a great way to save on your premium, but your insurance agent should review them regularly to ensure you’re getting all of the credits and money savings opportunities available to you.