Buying workers’ compensation insurance involves several steps, and the process may vary based on your location and the specific requirements of your business. Here’s a general guide on how to buy workers’ compensation insurance:
It’s important to know how to buy workers’ comp insurance. Having it can help your employees if they get hurt or sick from their job. It’s also a type of business insurance that most states require for those who have employees.
Workers’ compensation insurance, also known as workers’ comp, gives your employees benefits to help them recover from a work-related injury or illness. It can help cover medical expenses and lost wages if they miss work to recover. For business owners, it can help reduce the possibility of an employee lawsuit.
When it comes to workers’ comp coverage, each state has specific requirements that companies must follow. If you’re wondering what you need or just want to know, “What is workers’ compensation insurance, exactly?” We’re here to help.
How to Buy Workers’ Comp Insurance
How to buy workers’ comp insuranceMost state laws require employers to carry workers’ comp insurance. It’s important that you understand your state workers’ compensation laws when getting coverage. Depending on the state you’re in, there are three ways you can get workers’ comp insurance:
Private workers’ compensation insurance company: Private insurance companies set their own prices and can accept or reject customers. You may get better workers’ comp rates and customer service with a private company compared to a state offering.
Competitive state-funded workers’ compensation insurance: Your state competes with private insurers to offer workers’ compensation coverage. If you can’t get coverage through a private insurer, a state fund for workers compensation can help make sure your employees have protection.
Monopolistic state-funded workers’ compensation insurance: Business owners in North Dakota, Ohio, Washington and Wyoming have to go through their state’s fund to get coverage.
How Much Does It Cost to Buy Workers’ Comp?
Workers’ compensation insurance costs vary between insurance companies. Insurers base premiums on an employer’s payroll and the type of work employees do.
When you buy workers’ comp insurance, some factors that can impact your cost include:
- Number of employees
- The types of work your employees do
- State laws
- Payroll size
A formula you can use to estimate your workers’ comp costs is:
The National Council on Compensation Insurance (NCCI) maintains classification codes, or workers’ comp class codes. These describe the type of work employees in different industries do. Your workers’ comp costs can increase if you have a lot of employees doing high-risk work.
Your claims history determines your experience modification number. A good claims history can result in an experience modification number below 1.00. If your number is higher than 1.00, it means your business has a history of workplace injuries or illnesses. Be aware that not every state uses this number.
It’s important to note that workers’ compensation insurance is regulated at the state level, and the specific requirements and procedures can vary. Consulting with local insurance regulators or professionals can help ensure compliance with local laws and regulations.