How to Get Workers Comp Insurance For Your Employees in 4 Simple Steps

Feb 4, 2020Blog0 comments

Providing workers’ compensation for your employees is not only important but it’s absolutely necessary. 

The last thing you want is to have to pay out of pocket for someone else’s work-related injury, or worse—sued. With workers’ comp, you’re not just protecting the people who work for you, you’re also protecting yourself and your business.  

Wondering how to get workers’ comp for your employees? We’ll tell you everything you need to know in four simple steps. Keep reading to learn more. 

Workers’ Comp in a Nutshell

As an employer, you’re expected to take care of your employees, because beyond the burning of a hot coffee mishap, accidents do happen. Providing workers’ comp for your employees ensures that they’ll get the medical care and wage coverage they need in the event of a work-related accident or illness.

Workers’ comp insurance typically includes the following benefits:

  • Medical care
  • Either partial or total disability during recovery
  • Either partial or total disability for a permanent impairment
  • Job displacement benefits which include training, re-training, or skill enrichment if the employee can’t return to their previous job
  • Spousal and/or dependants benefits if death is a result of an on the job injury or illness.

Who is at fault for the injury makes no difference, as long as the incident occurred on the premises—or at a work location or in a company vehicle. Of course, this guaranteed benefit comes at a cost—with worker’s comp employees waive their rights to sue their employer for any injuries or damages.

How to get Workers’ Comp for Your Employees

Now that you have an understanding of what workers’ comp is and how it works, it’s time to learn what goes into acquiring the compensation. Some of the factors that go into the type of coverage you need and how much your policy will cost may include:

  • The number of employees you have
  • The types of employees you have
  • The type of work your employees do
  • How large your payroll is

To simplify things, we’ve broken the process of getting worker’s compensation insurance down into four steps: 

Step #1: Research Your State’s Workers’ Comp Law 

One of the single most important things is to check whether or not your state requires you to have worker’s comp insurance. Depending on the state you live in, there are different types of insurance as well as different ways to go about buying your policy. 

The different types of policies include:

  • PEO (Professional Employer Organization) PEO’s offer alternative policy options that can sometimes discount your workers comp rates while including and managing your payroll and HR services.
  • Private Workers’ Comp: They offer coverage regulated by the state, but they can choose their own prices—as well as their customers. 
  • State-Funded Workers’ Comp: State-funded programs are there to ensure that your employees get coverage, regardless of your business. 
  • Competitive State-Funded Workers’ Comp: This coverage is offered through a private carrier or a state program. These companies are usually in competition with private companies.
  • Monopolistic State-Funded Workers’ Comp: These policies really only apply to certain states such as Ohio North Dakota, Washington, and Wyoming.  These state law policies require that businesses get their coverage through the state-funded program. If the funds are limited, the rest of the coverage comes from the taxpayers’ funds for claims. 

Not all employers are required by state laws to provide workers’ comp insurance. As mentioned above the requirement depends on certain factors. Also, some states may exclude certain types of workers such as farmers or seasonal workers. Of course, if you don’t provide compensation you may be liable for paying your employees’ medical bills or even worse—you could get sued and have to face state-regulated penalties

Step #2: Make Sure Your Employees Meet the Qualifications

Workers’ comp benefits are only available to those who qualify. Your employees must meet a certain threshold of eligibility requirements, including during the time of an injury:

  • In some states, not all employees will have access to compensation.  For example, there are a few states such as Idaho and Wyoming that do not provide coverage for undocumented workers. 
  • Classes of employees such as housekeepers, babysitters, seasonal, casual, railroad, and agricultural workers may not be eligible for coverage depending on your state.
  • Independent workers or contractors are not typically eligible for compensation coverage in any state. 

If some or all of your employees aren’t eligible, then compensation claims cannot be filed on their behalf. Of course, if you employ domestic workers at more than 40 hours per week, you may be required to provide insurance—otherwise, you may risk being sued. 

Step #3: Gather Your Financial Records

You’re going to need all of your financial records and paperwork organized and ready to present to the insurance company.

This includes:

  • Your payroll
  • Financial reports (dating back as far as possible)
  • Employee information (hours, type of work, etc.)
  • A history of workers’ compensation claims, if any
  • Estimates for the next calendar year
  • Your mission statement or a description of your business

Your future insurance company wants to see proof of financial stability as well as your business knowledge in order to assess you. If you haven’t had precious insurance, any previous employee injuries should be well-documented with details including the date, type of injury, the information of the injured employee, the medical expenses said employee incurred, and their current status. 

Step #4: Purchase Coverage Through an Agent or Broker 

Not all insurance companies sell workers’ comp insurance directly. 

An experienced insurance agent or broker can walk you through all the details of the buying process. They will also help you understand the different laws, class codes, and any underwriting involved in a compensation policy.

Both agents and brokers sell insurance policies. However, an agent can only sell from their specific company while a broker is your representative. Brokers will contact different companies for their policies and quotes on your behalf as well as sending in the applications to get you the best policy within your limits. 

How Much Does a Policy Cost?

Now that you know how to get workers’ comp for your employees, it’s important to understand that your policy and insurance premiums are calculated based on your business classification code and your payroll. 

To find out more about the costs of workers’ comp, you can just ask us. You can also get a free online quote today.