Accidents are bound to happen no matter how well you implement and maintain safety practices. According to the U.S. Bureau of Labor Statistics, there are 2.6 million nonfatal workplace accidents and injuries every year. Protecting your employees from on-the-job injuries and illnesses is your responsibility as a business owner, and it all starts with obtaining the right policy.
Why get workers’ compensation insurance?
Workers’ compensation insurance provides benefits to your employees if they are harmed doing their job. A good policy will help pay for everything from medical and legal expenses to rehabilitation services if an employee has experienced an occupational injury or disease due to their work. A really great policy will supplement lost wages in case the employee needs to take time away from work to recuperate. The calculation of benefits may even consider future lost wages for permanent disabilities.
Workers’ compensation helps employees receive benefits without regard to fault and, in turn, protects business owners from lawsuits related to their employee’s injury. According to the National Council on Compensation Insurance (NCCI), the average cost for a workers’ compensation insurance claim is around $41,353.
Workers’ compensation laws are based on the principle that injured employees are entitled to receive compensation without proving fault against the opposite party. The one exception to the rule is if the injury is a direct result of the employee being impaired by drugs or alcohol.
No-fault laws were created in the early 1900s and evolved from the need to protect workers from costly legal battles, which were typically the only way to be compensated for lost wages and medical expenses when hurt on the job. Before adopting these laws, the onus was on the employee to prove negligence by their employers. Since employees often couldn’t afford to bring a lawsuit, they received little to no compensation. In 1913, more than 25,000 employees were killed in work-related accidents, and 700,000 were seriously injured. Even in fatal accidents, only about half of the victims’ families received payment. And even then, it was only about a year’s worth of pay.
The first workers’ compensation laws were adopted in 1911, and by 1921, only six states had not authorized compensation for workplace injuries. Today, all states, with the exception of Texas, legally require businesses to carry workers’ compensation insurance.
Who should carry workers’ compensation?
Businesses of all sizes with employees should carry workers’ compensation insurance. Whether you’re in hospitality and entertainment, construction, education, real estate, agriculture, or professional services, all types of industries should carry work comp insurance. Business owners need to cover all their employees but may not be required by law to carry coverage for themselves. Businesses without employees may not need to carry a policy from a legal standpoint but should still consider investing in a policy for themselves or for subcontractors. Many companies will ask to see a workers’ compensation Certificate of Insurance to do business. Having a policy in place puts your customers’ minds at ease and helps you remain competitive in order to retain their business.
How to get workers’ comp insurance
When choosing your workers’ compensation provider, it’s important to know your state’s requirements. Workers’ compensation is state-regulated—meaning its laws are implemented by a state agency. Each state administers its program through a commission or board that ensures businesses comply with the workers’ compensation laws. Specific requirements and regulations vary by state.
Each state also has its own penalties for failing to carry coverage. In Massachusetts, for example, you can face civil fines of up to $250 a day and criminal fines of up to $1500 in addition to jail time. In New Jersey, failure to carry a workers’ compensation policy is considered a criminal offense punishable by a fine of $10,000 or imprisonment for up to 18 months.
The carrier you choose can help guide you through these regulations and ensure you have the correct coverage to protect your business. Contact an ICW Group agent today to learn how ICW Group can help you navigate this process.
How much does workers’ compensation insurance cost?
How much you’ll pay for workers’ compensation insurance depends on the state that you live in, the size of your business, the type of work and industry you’re in, and your claims history. Cost is calculated per $100 of payroll, so the larger the payroll, the higher your workers’ compensation cost will be.
The cost of workers’ comp insurance premiums can vary depending on your business. In order to obtain a quote, you’ll need to provide vital stats about your business, like the number of employees and locations, description of services, business structure, payroll, claims history, and your experience modification rate, also known as your ex-mod. You’ll also need to provide employee class codes. The accuracy of these three-to-four-digit codes is very important as they’re used to estimate rates based on the level of risk of the work that your employees are performing.
Class codes are set by the NCCI or a state-specific entity such as the WCIRB, which establishes and maintains a database of class codes for hundreds of thousands of businesses. Coding employees incorrectly can be a costly mistake. If discovered during your annual premium audit, you’ll be held responsible for the difference in what you owe. If it’s found that you deliberately falsified a code, the act is considered fraud and can result in fines or imprisonment. Take the time to code employees correctly and make this part of your onboarding processes for new hires and promotions. A common oversight happens when business owners forget to adjust employees’ codes when their responsibilities change.
Choosing the right workers’ compensation carrier
When choosing a carrier, it’s important to evaluate coverage options, reputation, financial stability, claims handling procedures, risk prevention services, fraud prevention, additional value-added services offered with a policy, and rates and total cost. You’ll also want to ask about the carrier’s third-party ratings from companies like AM Best. A high rating indicates that the insurance carrier can successfully pay claims and provide necessary benefits for work-related injuries or illnesses.
ICW Group is a nationally recognized industry leader backed by an AM Best Rating of “A” (Excellent). When you work with ICW Group, you partner with a full-service carrier that can help you achieve fewer claims, less costly claims, and a lower ex-mod rating. ICW Group offers insurance products backed by over 50 years of creating the best insurance experience possible for its customers. It provides policyholders with value-added services such as risk management consultations, safety resources, and access to human resources advice. All free with a workers’ compensation policy.
Having an adequate workers’ compensation policy shows that you care about your employees’ safety and well-being. It’s a vital investment that safeguards your employees and protects your business from costly legal issues. By following these tips, you can make an informed decision that ensures your workforce’s safety and your business’s success. Find an ICW Group agent today and ensure the protection of your employees.