workers Compensation

Workers Compensation is generally considered to be the only mandated insurance coverage for a business.  This is mostly true but some regulations require liability coverage for certain professionals.  Let us not forget that automobile insurance is mandated as well.  Workers Compensation is required as soon as a business hires the first employee (even if part time).

Workers Compensation is made up to two primary section.  The first is what we think of as Workers Compensation.  The insurance pays for medical care and for lost wages of the worker if they cannot work.  The typical wage reimbursement is low enough that many employees will be encouraged to return to work based upon the difference in income.  The medical care is very broad.  It will be for medical visits, hospitalization, surgery and rehabilitation services.

Workers Compensation is based upon your payroll and the classification used.  The classification is determined by what your business operations might be.  Some businesses have only one classification for the entire operation.  However, most can have more than one classification.  The rates are very different.  For instance, a roofing contractor has a very high rate.  A clerical employee (and this can be professionals and highly paid employees) will have one of the lowest rates.  The rated depends upon historical data and the accident rate and claims costs associated with the various occupations.

While certain owners can be excluded if they choose, almost all (if not all) payroll is used for calculating Workers Compensation premiums.  All Workers Compensation policies are subject to audit at the end of the term.  The insurance company will request the appropriate payroll data or send an auditor to your business to examine the payroll.  You must allow this.  If you do not, the insurance company will “guess” at your payroll.  As you might suspect, the guess is never less than your true payroll. 

The second part of your Workers Compensation policy is important but almost never used.  This section is called Employers Liability.  While possible, the chances or this coverage section being utilized is very rare, indeed.  A quick explanation is this:  If one of your employees feels that their accident/claim was so egregious  and that your business put the employee in harm’s way with your knowledge, perhaps they could sue the firm under Employers Liability.  As a practical matter, there is a great deal of case law and statute that makes it nearly impossible to make such a claim against an employer these days.