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 Worker's Compensation
It's The Law

Each state mandates that employers provide Workers' Compensation to their employees. Owners and officers may exclude themselves.

Coverage

There are three elements in Workers Compensation:

  • Medical expenses for on-the-job injuries
  • Salary recovery while out of work due to that injury
  • Job retraining if the worker is unable to return to their normal profession

Cost Factors

There are three elements that make up the total cost:

  • Job classification
  • Estimated annual payroll
  • Claims history

Note: Past claims can have a tremendous impact on premiums and the effect can last for years. It is in everybody's best interest that you take great care in instituting and reinforcing the safest possible work habits and environment.

Audits

At the end of each year, the insurance company will audit your actual year end payroll and will either back bill if you underestimated, or credit if your actual was less than the estimate.

Minimum Premiums

In the case of single self-employeds seeking workers comp, there is a minimum premium that must be paid, even if your estimated earnings does not warrant that high a level. At the end of the year, you will be credited if that turns out to be the case.

Independent Self-employed Contractors

A true WC package for such a person is based on a percentage of annual revenues with a $25,000 minimum. A rate of $14 per $100 is a common starting point meaning a minimum premium is likely to start in the area of $3,500 per year.

Contractors needing to show proof of coverage in order to get onto a job site may purchase an "If Any" policy, on the basis of prospective hiring. The minimum premium is likely to be in the area of $750 but provides no benefits to the company owner. If there are no hires during the year, as a result of the audit, most of the premium will be returned.But keep in mind, in this case, if you are injured on the job, you do not have any personal coverage.

Show Some Consideration.

These types of policies pay very low commissions and take up a great deal of the agent's time. It is a service more than anything else. Many agents won't be bothered with doing it at all. As a courtesy to your agent, and to assure yourself of the best support and service, it is recommended that you combine your business liability and workers comp with the same agent. If your current agent will not provide the Workers Comp service to you, then why should they receive the rest of your business?

Certificates of Insurance
When contracting a job, the project manager will ask you to present a certificate of insurance. Your insurance agent will provide that for you, typically by FAX. HOWEVER, should you lose your coverage by way of unpaid premiums, the agent is obligated to advise the project manager of that fact. For your own job security, it is best to pay the full annual premium at time of application.

Workers Comp & Health Insurance
Many companies find the cost of WC daunting to say the least. For that reason, some find it difficult to also provide health insurance. That leaves the worker very exposed for time lost to illness rather than work related injury as well as injuries incurred off the job.

To put this as delicately as possible, an uninsured worker with a debilitating personal injury might be motivated to try to place a workers comp claim. The fact that a high percentage of claims are made on Monday's lends some credence to this possibility.

A group health plan can prevent this from happening, as well as provide a tremendous amount of financial security to the employees. There are a number of new group plan designs available now that can reduce the premiums formerly charged by managed care type plans. If you have not reviewed the health insurance market lately, call us for a complete analysis of your options.