Buying Tips:

Worker's Compensation Insurance

Coverage – All Workers’ Compensation policies are created equal! Coverage has to match the statutory requirements of each state’s Workers Compensation law. If employees are housed in multiple states, they are covered by their home states Workers’ Compensation laws. Coverage provided by Workers’ Compensation policies includes medical, lost time, disability and rehabilitation/retraining.

Pricing – There are over 100 different classifications. Rates are set by classification based on accumulated loss data by classification. For instance, roofers pay higher rates than office workers, since their exposure to falling from heights and carrying heavy loads is much greater. Rates are developed by classification and are charged per $100 of payroll.

Audits – Workers Compensation policies always have a subtle disclaimer in the premium section, which says something to the effect of “Provisional Premium”, “Deposit Premium”, etc. The point is, you estimate your payroll by classification for your renewal year and then “settle-up” following the end of the policy period. Premiums will either be returned, or additional premiums will be corrected based on how actual payrolls compare to estimated payrolls.

Independent Contractors – The most common discussion with contractors and small businesses is that everyone is an independent contractor, so they don’t have to be covered under Workers’ Compensation. If you produce 1099’s for subs and they cannot produce a certificate of insurance for Workers’ Compensation Coverage, you will be charged for them in your audit, since you are held responsible for their injuries under the law. This applies even if the firm is a one person business, who technically, under the law, is not responsible for carrying their own W.C. policy. The General still is responsible for them, however, so you will have to pay for them.

Incorporating – Very small companies, such as one owner businesses, often go without Workers’ Compensation coverage to save overhead dollars. Look above at the amount of coverage that you get for your premium dollar – disability, medical, etc. Unless you are in a very high rated class like roofers or bricklayers, it should be an easy decision to obtain coverage. You must incorporate to buy coverage, since you can’t buy it for yourself. Set up a company. It costs less than $500 and the benefits, over time, outweigh the costs. We can help to advise you with this.