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Workers’ compensation is mandatory in most states and for most companies to protect businesses and employees, and you only need a few employees to require it. In addition, some states allow you to choose between state and private insurance companies, while others mandate going through the state. In states where you can choose, consider companies with ongoing assistance and resources to help you meet your legal obligations.
Workers’ compensation pays for employee injuries or illness related to their work, and that sometimes includes lost wage or death benefits. It also protects businesses since employees typically can’t sue for injuries when accepting workers’ compensation benefits.
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This policy doesn’t just protect direct injuries like falling at work. Other situations it may cover, depending on state laws:
Employers aren’t required to pay workers’ compensation benefits in every accident scenario. Exclusions may depend on the exact situation and state but can include:
Most businesses require workers’ compensation insurance if they have multiple employees, unless the size or type of business receives a specific state exemption. Each state sets its own criteria for businesses. However, a few types of businesses or employees may get exempt from coverage:
You can choose to self-insure if your company meet certain revenue criteria. . However, you could still be held liable for injuries, even if your state doesn’t require you to get workers comp. So it might be a good idea to get workers’ compensation even if it’s not required.
The average rate is $1.85 per $100 in payroll. So for a company paying $500,000 in salaries, workers’ comp would be about $9,250.
Your premium depends on several factors, especially the industry you work in and employee wages. Each state sets rates based on different industry classification codes, and high-risk industries like construction may see higher rates. Then, insurance companies multiply the rate for that industry code by the payroll amount per $100.
You’ll need to declare annual wages before your insurance company can calculate the premium. Also, large companies may get an additional experience rating (MOD) that modifies the premium based on its claims history compared to similar companies.
Examples of determining a workers’ compensation premium:
|Industry rate||Payroll (per $100 in wages)||Claims modifier (MOD)||Annual premium|
You can’t control every factor related to your premium, but you could save money if you have high workplace safety. Factors that affect cost:
Your state may let you choose a workers’ compensation policy through state-run and private companies. However, some areas require you to purchase a state policy without comparing other options.
You may want to think of your insurance company as a business partner that helps your business run without legal hiccups. A company with many resources and professional services can help you meet requirements in the best way for your business.
If you can choose your own insurance, look for companies that offer:
Yes. Your employees can get coverage if they traveling for work, work remotely or carry out business in a different state. However, you’ll need to name the states where your employees work on your policy, whether they work there on occasion or on a regular basis.
Employees can also file a claim in the state with the most generous workers’ compensation policy, whether it’s in your company’s state, the state where the accident happened or the state where the employee lives.
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