How and Where to Get Workers’ Compensation Insurance

Jan 17, 2020Blog0 comments

For every hour across workplaces in the United States, 510 employees get injured.

With such statistics in the rear-view, investing in workers’ compensation is critical to avoid a significant financial claim wiping out or debilitating your business. 

Such an insurance policy helps your staff members meet unexpected medical expenses sustained during their work. It also helps them supplement their income if they have to stop working due to an injury or illness. 

Here is a compact guide on how and where to get workers’ comp to protect your staff. 

What Is Workers’ Compensation?

Workers’ comp is a kind of insurance policy that a business takes out to provide employees who get injured or sick while on the job with benefits. These financial benefits help injured or ill workers to meet their medical expenses or not lose the income they could have earned had they been working. 

A workers’ comp policy covers several issues that include:

  • An illness caused by an employee’s work environment
  • An injury or loss of limb
  • Permanent impairment
  • Injuries caused by repetitive motion
  • Lost wages
  • Rehabilitation
  • Medication treatment
  • Death while on the job

When it comes to settlement, workers’ comp will provide coverage regardless of whether the employee, customers, employer, or even co-workers. 

Although workers’ comp might, on the face of it, seem non-essential, no business should do without it. More than just another expense, workers’ comp can help protect your business from litigation should an employee get sick or suffer an injury while working. It’s much better to pay the insurance premium on workers’ comp than to foot an outsize claim when you don’t have the funds. 

Once you purchase workers’ comp for your business, you will be contributing to both the federal and state workers’ comp funds. When a staff member becomes sick or gets injured while working, they will then receive the benefits. However, payment for pain and suffering and negligence claims are not part of workers’ comp benefits. 

Workers’ Comp and the Law

Each state makes it a legal requirement for most companies to carry workers’ comp except for Texas. The rules that govern what workers’ comp will cover, how the medical care will be delivered, and how the issues will be covered all vary by state.

With that in mind, you must learn your state’s specific rules and regulations. If, as a business, you fail to carry workers’ comp, you can expect to pay any resulting claims out of pocket. Furthermore, you may have to pay penalties your state might levy against you. 

The level your business should carry for workers’ comp will depend on the kind of work your staff does and the number of employees you have. The type of business you operate will also factor into the necessary workers’ comp policy for you. 

Where to Buy Workers’ Comp Insurance

Typically, workers’ comp is bought separately from your firm’s general business owner’s insurance policy. Depending on where your business is located, you have several options through which you can purchase workers’ comp. 

1. Private Workers’ Comp Insurance Firms

Private companies that offer workers’ comp are regulated by their state’s laws on the policy. Since these companies are competing with one another for your business, they tend to provide competitive rates and high-quality customer care. With that said, private insurance providers do set their rates and can choose to turn down or accept potential clients.

2. PEO (Professional Employer Organizations

PEO stands for professional employer organizations. When you partner with one of these companies, they become co-employers for all of your employees. This means they share the responsibilities you have as an employer. a PEO can prove to be a great alternative to private workers comp carrier policies as the PEO can typically approve risks that most private carriers will not  provide coverage for while also offering discounts on workers comp rates while lowering most small businesses costs on HR, payroll and employee benefits.

3. State-Backed Workers’ Comp Insurance

If you run a small business that can’t get coverage from a private insurance company, and have certificate holders that require your company to have a MPP (Minimum Premium Policy listing your company as the insured on the certificates of insurance) then a state-backed program is for you. Such a program caters to all employees regardless of the firm they work for. 

4. Monopolistic State-Backed Workers’ Comp

In some states, businesses are required to purchase workers’ comp only from state-run programs. These states include North Dakota, Wyoming, Ohio, and Washington.

The main downside to such an approach is that if the state fails to pool the funds efficiently, it might end up using tax-payer money to settle claims. Other challenges to this type of workers’ comp program include heavy bureaucracy and a lower level of customer care. 

How to Buy Workers’ Comp Insurance

When you’re buying workers’ comp insurance for your business, you have to determine whether you should purchase it directly or via an agent or broker. 

1. Buying It Directly

Purchasing your workers’ comp insurance directly from the provider has the benefit of being fast and convenient however alot of carriers require policies to be issued thru an agent or broker.

Most firms nowadays tend to offer all the information you need to purchase on their website. A downside to this will be if you prefer dealing with an in-person representative during your purchase as there are none. 

2. Buying from an Agent or Broker

Purchasing workers’ comp insurance from an agent or broker can be preferable if you prefer a face-to-face transaction. For many business owners, having someone there to not just sell the policy to them but also guide and answer all their questions is essential. 

While many business clients looking to buy workers’ comp might think that an agent and a broker are synonymous, there is a difference. A broker is someone who seeks insurance quotes from multiple providers. Their core duty is to choose the coverages and their limits and submit that to several providers for a good deal. 

On the other hand, an agent is someone who works for one or more carriers, specifically selling their policies. Thus, an agent will not offer you policy options from other providers whom they do not work for. 

An agent who represents just one insurance provider is known as a captive agent, while one who represents several carriers is called an independent agent. A captive agent doesn’t work on commission and is on the insurance carrier’s payroll. 

Ready to Offer Benefits Tied to Workers’ Comp?

When a worker suffers an injury or gets sick due to their work, they risk losing their wage and are faced with unexpected medical bills. Thanks to workers’ compensation, it’s possible to ensure the well-being of your staff while still protecting your firm from unforeseen liability claims.

National Workman’s Comp Solutions is a National Brokerage Firm that works with over 50 different carriers and PEO’s. As opposed to being a captive agent that will tell you their one carrier is the best for you and any other business they come across, we understand that each business has individual needs and will make sure to place you with the best policy that meets all of your business requirements. National Workman’s Comp Solutions is passionate about seeing your employees’ well-being covered through a tailor-made solution for them. Contact us today for a workers’ policy suitable for your team.