Do I Need Workers Comp Insurance for My Business and How Much Does It Cost?
Workers' Compensation is an important insurance to have in place prior to accepting any job or contracting your services out. It provides you with the coverage you need in case of any personal accident or property damage occurring. In order to figure out the cost, specific calculations will be made to ensure you have adequate coverage.
An insurance company will look at your business and determine how much risk you and your employees face on a daily basis. The number of employees within your company and your annual payroll will additionally be taken into consideration. In order to receive a genuine quote, it is vital to be as honest about the underwriting questions as possible.
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Rate of Classification
The National Council on Compensation Insurance has data in regards to all industries. They look at the type of work being conducted and apply a formula that incorporates how likely an injury is to occur and the average medical cost that is associated with that issue. Actuaries then calculate these figures to provide a classification rate for every industry.
An easy way to estimate how much Workers' Compensation insurance will be for your business is to multiply your annual payroll figure by your classification rate. If a company had an annual payroll of $150,000 and were paying a rate of 10 percent, their annual workers' comp premium would be $15,000. After the premium is determined, employers can negotiate with their insurance broker or insurance agent to come up with the best cost.
Discounts on Workers' Compensation
If your company has a variety of safety programs that are mandatory for staff, you may be eligible for a discount. Be sure to discuss how implementing regular safety training for your employees can positively reduce your rate. Clients that have premiums of $5K or more may additionally qualify for discounts.
Workers' Compensation guidelines state that any individual who is employed by the company and considered to be an employee regardless of classification is covered under the policy. Part time and full time staff, contracted laborers and independent contractors all fall under this protective umbrella. It is common for subcontractors to have their own valid policy. If individuals have their own workers' compensation policy, those numbers may be excluded from the company's required coverage. Note that general partners and sole proprietors are excluded from coverage unless they specifically request their coverage in writing ahead of time. If you are working with a variety of trades and entrepreneurs, be sure to address the coverage questions from the beginning so that no one is unsure of where their coverage lies.
Multiple Quotes Can Help You Find the Right Coverage
The great part about shopping around is that you get to experience various levels of customer service. Hopefully, a claim will never be filed against you and your business. Hopefully, no one ever gets hurt on the job. Being prepared for the unexpected is the responsible and reliable thing to do. Keep your employees happy and rest assured at night that all will be covered in the event it needs to be.