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| Workers' Comp Insurance |
Buying workers' comp insurance for your employees is mandatory by law in all states. But depending on the state in which your business is located, you may be able to shave your costs and still protect your workers.
Workers' comp laws are designed to make sure that:
- Injured or disabled employees hurt on the job get compensated.
- You as the business owner aren't sued.
You're bound by your state's workers' comp statutes unless your workers are involved in significant multi-state business (where federal statutes apply). These laws cover benefits that are necessary and whether an injured worker will be able to sue co-workers or you as the owner of the business.
While some states require employers to purchase workers' comp insurance through a state-run government program, most states allow shopping around with private carriers.
The policy you settle on will likely cover:
- Medical costs
- Disability income
- Any necessary rehabilitation
- Death compensation to the family of a deceased employee
Some policies have additional coverage just in case the family of a deceased employee sues you personally.
Setting Insurance Rates
Your rates will vary greatly, depending on the number of employees you have, the safety risks associated with employment in your industry, your workplace injury rate and how well you inspect for and control known safety risks. The National Council on Compensation Insurance sets the standards for workers' comp insurance premiums using a highly technical many-faceted system of coding.
Yearly Audits
Your insurance company will probably do a yearly audit of your business to readjust your rates. It's important to get a copy of your insurance audit to look at:
- How payroll was calculated.
- Employee classifications (line workers are more expensive to insure than office workers or managers).
- How any accidents or safety violations were reported.
Getting The Best Rate
When trying to get the best possible buy on workers' comp insurance:
- Be upfront with your insurance agent about all your business activities and any known risks. It's better to pay a slightly higher premium than to find out after an accident that you're not covered for a particular activity because you forgot to mention it to your insurance agent.
- Make sure your employees are all properly classified, all the time. If an employee quits or gets assigned to a less hazardous position, tell your workers' comp insurance agent right away.
- Watch the payroll numbers your insurance company uses to determine premiums for your business, and make sure they're calculated accurately.
- Lobby for lower premiums if you upgrade safety equipment or put new safety procedures into place.
- Keep careful track of your safety record, and ask for a discount on your workers' comp insurance if your accident rate declines.
- Check your state's workers' comp laws to be sure you're not insuring workers that don't have to be insured under state law (such as corporate officers).
Taking a little time to keep on top of your workers' comp requirements will ensure that your workers get what they need when they are injured. And that means less stress for you as the business owner.
Related Web Links:
Summary of Workers' Comp Laws by State
National Council on Compensation Insurance |
