Workers’ Compensation Insurance Companies
Workers’ Compensation Insurance Companies – As a business owner, it’s your responsibility to provide a safe work environment for your employees, but accidents and injuries may still happen. According to the Bureau of Labor Statistics, 2.1 million workers in private industry were injured on the job in 2020.
To protect your staff, workers’ compensation insurance is essential and is even a legal requirement in most states. It provides financial support and medical benefits to employees who are injured or who become sick due to their employment. In addition, it prevents you from paying costly expenses; the average cost per workers’ compensation claim is $42,008.
What Is Workers’ Compensation Insurance?
Unfortunately, accidents do happen, no matter how many precautions you take to ensure your workplace is safe. Workers’ compensation insurance provides business owners with protection from claims by employees who experience work-related injuries or illnesses.
Workers’ compensation typically covers the employee’s medical expenses, rehabilitation expenses, and a portion of their lost wages. If an employee passes away while working, workers’ compensation insurance will also pay for funeral expenses.
Who Is Exempt From Workers’ Compensation Insurance?
Workers’ compensation requirements vary by state. However, sole proprietorships and partnerships generally don’t have to carry workers’ compensation insurance until they hire employees who aren’t partners. Employees are considered to be people performing services for the company for pay, even if they’re minors or non-citizens.
Do I Need Workers’ Compensation Insurance for One Employee?
In most states, employers who have at least one part-time employee must have workers’ compensation insurance. There are some states, such as Alabama, where coverage isn’t required for businesses with four or fewer regular employees, but those are the minority.
What Is a Workers’ Compensation Insurance Audit?
When you purchase workers’ compensation insurance, your policy is valid for one year, and your premium is typically based on the annual compensation you anticipate paying that year. During the workers’ compensation insurance audit, also known as a payroll audit, auditors will review how much your payroll changed from the projected amount at the beginning of the year so the final premium can be adjusted accordingly. In some states, workers’ compensation insurance audits are a mandatory legal requirement.
What Is a State Fund?
State funds are state-sponsored workers’ compensation insurance programs. Some states are monopolistic, meaning there is no private workers’ compensation insurance available. States with monopolistic insurance requirements include North Dakota, Ohio, Washington, and Wyoming.
In monopolistic states, you cannot shop for the best deal and you cannot provide coverage for out-of-state employees. Instead, you’ll have to purchase a separate insurance policy for them from the state in which they work. You may also have to purchase a separate employer liability policy to cover you against lawsuits and other workers’ compensation case costs that result from an injured employee.
In other states, there is a competitive state fund where you can choose insurance from the state or a private carrier. With this option, you can choose the coverage that fits your needs and you can compare shops to get the best deal, though the state fund may be a better option for new or hard-to-insure businesses.
How Much Is Workers’ Compensation Insurance?
How much you’ll pay for workers’ compensation insurance is dependent on your state, business size, industry, employees’ type of work, and your claims history. Your cost is calculated per $100 of payroll, so the larger your payroll, the higher your workers’ compensation costs. If you don’t have a past history of claims, you’ll have a low experience modification number, or “mod.” If you have a history of claims, your number will be higher. A number over “1.00” reflects a history of claims.
The National Council on Compensation Insurance has a database of over 700 class codes that describe jobs’ risks and has the corresponding rate. For example, a copywriter’s position is less risky than a welder’s, so workers’ compensation insurance will likely cost less.
To estimate your costs, use this calculation:
Worker’s class code rate x experience modification number x (Payroll / $100) = Premium
According to the National Academy of Social Insurance, employer costs for workers’ compensation insurance range from $0.55 per $100 of covered payroll in Texas to $2.25 per $100 of covered payroll in Alaska. click here
Methodology:
To select the top six workers’ compensation insurance companies, we researched major insurers and identified 19 well-known companies that specialize in different industries. We evaluated each company on its business options, transparency, available discounts, ease of obtaining a quote, and AM Best rating. Particular emphasis was placed on a company’s AM Best rating; companies with less than an “A” rating were disqualified.
The one exception was GTM Payroll Services. There are no other national companies that offer workers’ compensation coverage for nannies and domestic workers. Because GTM is a broker and connects customers with insurance partners, we decided to include it on the list even though it has not been ranked by AM Best. Workers’ Compensation Insurance Companies
