Workers’ compensation insurance is essential for your small business. Also called workers’ comp or workman’s’ comp, it helps cover costs for your employees if they experience an injury at work. It can also help you with legal fees if an employee rejects a compensation offer and pursues a settlement.
With workers’ comp being such an important part of your business, it’s equally important that you find the right insurance company to partner with. You should request quotes from multiple companies before deciding on one and be sure to compare the kinds of coverage they offer as well as their pricing.
Understanding Your Coverage Needs
Several factors will affect how much coverage and the types of coverage you need for your business. For example, businesses in higher-risk industries, such as construction work or logging, will require higher coverage.
Also, different states have different requirements, such as coverage minimums, for workers’ comp. In Florida, there are different requirements for different industries: construction, non-construction, and farming. In other states, like Illinois, they don’t divide by industry but instead have blanket regulations for all industries.
Each state also has its own list of exemptions for the employees who do not require coverage, such as independent contractors. Some states will allow you to apply as a “self-insured” business. Check your state’s requirements before you start looking for quotes so that you know exactly what to look for in a policy.
Understanding Your Coverage Options
Basic workers compensation insurance covers your employee’s medical expenses related to a work injury or illness, including ongoing care if necessary. It also pays them a portion of their lost wages due to the injury or illness. In the case of a fatality, workers’ comp typically covers the funeral costs of the deceased employee.
Most workers’ comp policies also include benefits such as illness coverage, which provides additional coverage for the medications and ongoing care related to illness. Also, workers’ comp typically covers repetitive injury coverage, since not all injuries are due to a single traumatic event. This type of coverage helps employees with issues such as carpal tunnel syndrome that takes months or years to develop.
Requesting Quotes
There are a few things you will need to have on hand when you request a quote from an insurance company:
- Identify Your Business Type– This will help the insurance provider identify your industry’s classification code, which will impact rates. Higher risk industries will have higher rates.
- Number of Locations– Knowing the physical location of your business will allow the insurer to calculate your state and local fees. The number of locations you have will affect those fees as well.
- Number of Employees/Total Payroll– Insurance providers use this information to determine the total cost of coverage.
- Your Company’s Claim History– One thing that heavily impacts your rates will be the experience modifier. Insurance providers compare your claims history to the average claims in your industry, and if you have a higher than average claim history, you will pay higher rates.
Finding the Best Fit
There are a lot of things to consider when you are looking at workers’ comp insurance. State laws, your industry, and the number of employees you have are all factors that will affect the kind of coverage you need.
You may also want to consider the type of environment that you hope to create at your company—employees who know that their employer has their back and covers more than just the legally required minimums tend to show more loyalty.
Clear Away Confusion
Whether you are opening a new business or just looking to change up your current coverage, workers’ comp can be a very confusing issue to navigate. Plan ahead and take the time to look at all the requirements for your state before you try to get quotes.
Be sure to stay organized and have all the documentation you need available when you call. After collecting quotes from each of your provider options, you’ll have everything you need to make an informed decision and select the best-fit policy for your business.
