Workers Compensation Insurance
Embroker helps you get workers compensation insurance. This state-mandated insurance policy covers claims from employee injuries, including medical expenses, death benefits, lost wages, rehabilitation, and more.
What Is Workers Compensation Insurance?
Imagine one of your employees accidentally takes a tumble down the stairs at work and breaks a leg. Or another employee accidentally throws out their back lifting heavy office equipment.
Such incidents are an unfortunate everyday possibility and can represent a costly and unpleasant factor in your business. Workers compensation insurance (also known as “workers comp”) protects your business from the costs that result from incidents of injury in the course of employment.
Workers compensation insurance covers claims from injured employees, including medical expenses, death benefits, lost wages, and rehabilitation.
The coverage is a win-win for both the business and the employees. In most instances, employees give up the right to sue their employer over a workplace injury, knowing they will be compensated for any workplace-related injuries thanks to the workers compensation insurance coverage that their employers have purchased.
How Workers Compensation Claims Work
When an employee is injured at work, both the employer and the worker need to follow procedure and be prompt to avoid the claim being rejected. The injured employee should provide their supervisor with detailed information on the injury, including the date, time, and nature of the injury. After that, they should submit a formal workers comp claim.
The employer should provide the employee with proper legal guidance and paperwork and then file the claim to the insurer. During this process, it’s on the employer to ensure that the process is compliant with the state legislation for reporting at work injuries.
In most cases, the insurer will accept the claim and offer an amount they feel is appropriate compensation. If the employee doesn’t agree with this estimate, they may decide to sue the insurer to get a higher payout.
Workers Compensation Policy Limits
Workers compensation coverage will have liability limits clearly defined in the policy contract. This is basically the maximum amount that can be claimed under the policy. Each state will have its own minimum required coverage limits. Most states will have three different limits:
- $100,000 limit per occurrence for bodily injuries
- $100,000 per employee for bodily injury from occupational factors
- $500,000 policy limit for bodily injuries caused by disease
Insurers will offer increased limits if you feel the minimum prescribed limits are not enough for your business. Keep in mind that the higher the limit, the more you’ll have to pay for insurance.
Who Is Workers Comp Insurance For?
In short, workers compensation insurance is the foundation for a quality insurance program for any company with employees.
If you own or run a small business or big corporation that interacts with people on a regular basis, or employs more than one person, you should secure adequate workers compensation insurance.
In terms of risk by industry, this study on workplace safety cited the top five injury and illness-prone industries like local government, healthcare retail, manufacturing, or hospitality.
The top five fatal injury and illness-prone industries are construction, transportation and warehousing, retail, and manufacturing.
Does that sound like your business? Get started with Embroker to receive an instant workers compensation insurance quote in just a few minutes.
Workers Compensation Requirements By State
Each state has its own unique set of requirements and rules on how workers compensation functions and how to purchase it. For instance, four states are considered monopolistic when it comes to workers comp: North Dakota, Ohio, Washington, and Wyoming.
Businesses operating in monopolistic states can only buy workers comp insurance from the state fund. Other states will allow you to purchase coverage from private insurers or several competing state funds.
Another important distinction is that states will differ in which workers need to be covered and which are exempt. If you want to learn more about how each state’s rules and regulations, you can check out Guide to Workers Compensation by State.
Do Self-Employed Business Owners Need Workers’ Compensation Insurance?
Solopreneurs without employees are typically not required to purchase workers compensation insurance. However, in certain situations it could be a good idea to secure the coverage. For instance, certain businesses may require those performing work for them to carry workers comp.
Additionally, securing the right workers compensation insurance policy may prove to be a prudent idea if you get injured while working. Even if you have personal health insurance, most policies will exclude work-related injuries.
Why Do You Need Workers Compensation Insurance?
Generally speaking, businesses need workers comp insurance because even the best safety precautions sometimes fall short and injuries and illnesses occurring at the workplace or resulting from work are all but inevitable.
No one likes to imagine one of their employees being injured on the job but it’s a reality that can’t be ignored. Accidents can happen anywhere—even after the most comprehensive safety training and in the most low-risk environments.
Should an employee be injured on the job, your legal expenses would be completely covered by your insurance. Plus, your employees would be completely covered for their medical expenses, wages for lost work, and any rehabilitation services. In the case of fatal accidents, funeral expenses are paid out to the remaining family members of the deceased.
What Does Workers Compensation Insurance Cover?
The policy will cover the near and long-term costs of an employee’s workplace-related injury or illness. It will pay for the hospital bill and for any medication or physical therapy that will be needed during recovery, even lost wages.
If an employee decides to sue, a portion of your workers compensation insurance should be able to cover your legal expenses in such a situation as well.
When compiling a list of the most common injuries that can occur at the workplace, most of them can be grouped into three categories: overexertion, contact with objects or equipment, and slips, trips, or falls.
This detailed survey conducted in 2018 gives insights into the top eight most common injury types occurring on the job last year:
- Sprains, strains, and tears
- Non-specified (usually soreness or swelling)
- Puncture wounds (excluding gunshots)
- Heat burns
What’s Not Covered?
There is a “coming and going rule” that applies to injuries that will rule out coverage in cases of injuries that occur when commuting to or from work.
However, if your job entails driving and you suffer a work-related injury in your vehicle while driving during work hours, obviously, the workers compensation insurance policy will cover such an instance.
If your company likes organizing team building activities, try to make them as safe as possible, because most insurance policies will not cover injuries sustained at recreation events like team buildings and happy hours.
Similarly, any injury that is a result of intoxication or substance abuse will not be covered either.
How Workers Compensation Settlements Work
Settling a workers compensation claim can be a very long and drawn-out process. And while filing a claim is pretty easy and quick, waiting for it to be settled can certainly take a while.
Let’s take a quick look at what the entire process entails.
Dealing with an Employee Injury
If an employee is hurt, make sure that you try to provide them with the proper medical attention as soon as possible. Once the employee has been taken care of, you can begin an investigation into what happened. This will include documenting any possible safety issues and getting photos of the area in which the injury occurred, as well as reports and statements from workers who witnessed the injury.
Filing the Claim
In order for the employee to receive benefits, the work injury must be reported fairly quickly. Most insurers will require a report to be submitted within 30 days in order for the claims process to start, but our advice is “the sooner the better.”
Once you have filed the claim, you wait to see whether it will be approved or denied.
Can a Claim Be Denied?
Yes, a claim can be denied if the insurer concludes that the injury was caused by horseplay or fighting, occurred while the employee was under the influence of alcohol or other substances, occurred during the employee’s commute, occurred while the employee was committing a crime, or if it turns out that the injury was self-inflicted.
The employee will be able to appeal the denial and can even hire a lawyer independently to represent them in the appeal.
What Happens If the Claim is Approved?
An approved claim means that the insurance company will pay for all medical expenses related to the injury. The employee will receive a portion of their wage as a weekly benefit. These disability benefits usually total two-thirds of the employee’s regular weekly pay.
Once the employee returns to work, these benefits stop. However, the claim can still be open even if the employee has returned to work.
For example, your employee might be able to return to work after a couple of weeks after suffering a sprained ankle. However, if the ankle still needs to receive therapy in order to successfully heal, the insurer will continue to pay all medical bills related to the claim, even though the employee is already back at work.
How Are Settlements Reached?
In some cases, the claim can simply be closed if the worker is completely recovered, back at work, and there are no more medical bills or benefits to be paid.
However, in some states, the process of closing the claim will involve a settlement that needs to be negotiated between the insurer and the injured worker.
In this process, the insurance company and employee will make an offer to cover future treatments or unpaid medical bills and benefits. If the employee accepts the offer, they will be paid either via a lump sum or structured payment.
Check out this blog post if you’d like a more detailed and in-depth explanation of the entire workers compensation settlement process.
What Does Workers Compensation Insurance Cost?
“Is it expensive?” might be the first question most business owners have about workers compensation insurance. The answer varies greatly from state to state (since each state has different workers compensation laws) and the insurance company from which you purchase your policy.
Generally, there are five factors that will determine your workers compensation premiums:
- How many employees you have
- Your company’s claims history
- Experience Modification Rates
- The type of work they do
- Workers Compensation Class Codes
The formula that the insurers use to calculate your workers comp rate can be simplified as:
Employee Classification Rate X Employer Payroll (Per $100) X Experience Mod Rate = Your Workers Comp Premium
The biggest single driver of workers compensation premium fluctuations is the Experience Modification Rates, also known as XMods. The XMod is a mathematical formula that insurance carriers use to compare similar businesses. An insurer compares a company’s estimated losses to actual ones over a three-year period, then assigns a number rating, with the hypothetical “average” being 1.00.
If a company has more losses than average, the score climbs above 1.00, thereby “taxing” the business for past claims. If a company outperforms its peers in safety, with fewer claims, the score drops below 1.00 and counts as a “credit.”
The Inspection Bureau, which promulgates experience modifications, does occasionally make mistakes. It’s advisable to review the worksheet yearly to confirm accuracy. This is yet another reason why working with an experienced and knowledgeable broker who’s committed to protecting your business from excessive costs is highly recommended.
For more information, read our full guide on workers comp cost and how to calculate premium cost per employee.
Why Get It With Embroker?
We’ve made it easier than ever before to complete the purchase and get workers compensation coverage. How easy? We don’t even need to see equity ownership or financial statements from you.
As a digital company, Embroker passes the savings for unnecessary administration on to you—for the most competitive price on workers compensation insurance you’ll find anywhere.
Protect your business with the broadest coverage in the industry. You can tailor policies to your needs by choosing your own workers compensation insurance limit and deductible.
We provide you with expert support no matter your question: Reach us 24/7 via phone, email or live chat. You even get a personal account manager to look after you and your insurance needs.
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