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Tennessee Workers Comp Insurance: Cost, Cheap Quotes, & Requirements

In Tennessee, almost every employer is required to provide workers compensation benefits to their employees. Workers comp insurance is one the most essential protection for employees in any business, so you should not mess around with it. If you have a business in Tennessee, you need to get this insurance (with only a very few exceptions). Tennessee workers comp insurance rates are 5% higher than the national average. It actually ranks 28th out of the the 50 states in the country.  

How much does Tennessee workers comp insurance cost? 

Insurance companies use a formula that multiplies payroll/100 X class code X experience modification rate to get your premium.

Payroll is factored in since the more you pay, the more employees you have, and that’s more people who could potentially become injured (according to insurance companies, anyway). 

Experience modification rate is the only factor you have any control over. It basically compares your history of workers compensation claims with claims from other companies in similar industries. The longer you’re in business without having to file a workers compensation claim, the lower your rate will be. Experience modification rates (EMR) are somewhere between 0.75 and 1.25. An EMR over 1.0 means you’ll spend more for workers comp, and an EMR below 1.0 means less expensive rates. 

Class codes are four digit numbers that are assigned to each industry, set by the Tennessee Department of Insurance. Each code has a corresponding dollar amount which is what you pay per $100 of payroll. Some industries are more expensive to insure than others. 

The average cost of workers comp insurance in Tennessee is $1.37 per $100 payroll

Keep in mind that this is just the average. Your rates will be different. You should shop around with a few companies or work with 1 or 2 brokers to compare several quotes. Comparing quotes is the only way to make sure you can get the cheapest rates for your company. 

How to calculate Tennessee workers comp insurance cost? 

Workers compensation rates vary by industry, how much experience you have in your industry, and payroll. There’s a formula you can use to figure it out:

Class code X Payroll/100 X Experience modification rate = Premium

This will only get you a rough estimate of how much you’ll pay, but it should give you an idea. Only insurance companies can give you the final rates for your company. 

What factors impact Tennessee workers comp insurance cost? 

Tennessee workers comp insurance cost varies by several factors as follows: 

  • Your industry: Your four digit class code–is the biggest factor affecting your workers compensation premiums. 
  • Your payroll: Payroll is also a factor, although it’s actually based on projected payroll. One way to save money on workers compensation insurance is to get a pay-as-you-go policy, because those rates are determined by your actual payroll. So, in other words, you won’t be paying for workers who are on vacation, have been fired, or are yet to be hired. 
  • Your claims history also affects your rates. If you’ve never had a workers comp claim, your experience modification rate will be lower and then you’ll pay less. Safe workplaces pay less in workers compensation insurance over time. 
  • Your location: Insurance rates always vary by state. Some states have higher rates and others are lower. 

Industries with the cheapest workers comp insurance in Tennessee

Below are the three least expensive industries to insure and their class codes in Tennessee are:

Class codes  Industries  Workers comp insurance rates in Tennessee 
8810  Clerical — Office employee $0.07 per $100 payroll
8832 Medical Office — Doctor — Dentist — Chiropractor — Optometrist $0.13 per $100 payroll
8868  Religious Organization — Church — Temple $0.16 per $100 payroll

Industries with the most expensive workers comp insurance in Tennessee

Below are the three most expensive industries to insure and their class codes in Tennessee are:

Class codes  Industries  Workers comp insurance rates in Tennessee
5551  Roofing Contractors $9.12 per $100 payroll
5645  Residential Construction — Home Builders — Remodelers — Siding $7.81 percent per $100 payroll
7230  Package & Parcel Delivery $3.97 per $100 payroll

What this means is that the insurance companies have concluded with years of historical data that an office worker’s chances of becoming injured on the job are just a fraction of the chances of a residential construction worker or a roofing contractor getting hurt. 

Keep in mind that these rates are set by the Tennessee Department of Insurance. Final rates are provided by the insurance companies that you shop with. They can offer discounts, dividends, and credits to policyholders. So your final rates will be different. Be sure to shop around with a few companies or work with a top broker like Simply Business, InsurePro, or CoverWallet to compare several quotes to find the cheapest one for your company. 

How to find cheap Tennessee workers comp insurance? 

The easiest way to save money on workers compensation insurance is to shop around. Just spending a few hours obtaining quotes from several insurance companies could save you hundreds of dollars. 

Another way to save money, as we mentioned above, is to choose a pay-as-you-go workers compensation policy. This way, you’ll only pay for employees that are actually working for you that week, instead of an estimate of how many people are supposed to be working. 

Make sure your business emphasizes safety and a safety program is posted where everyone can see it. You’ll pay a lot more in the future if you have to file a claim. 

Get Tennessee workers comp insurance quotes online from brokers 

Online brokers are not insurance companies, but rather, they partner with various insurance companies to be able to offer you several online quotes from their partner companies. Some online brokers include:

  • Simply Business: Best for finding low-cost coverage 
  • InsurePro: Best for flexible short-term coverage, ie. you can get coverage for a couple of days or weeks. 
  • CoverWallet: Best for comparing several quotes online
  • CommercialInsurance.net and Smart Financial: Best if you prefer working with an agent. Their agents are independent agents, ie. they can get quotes from several insurance companies 

Online brokers often work with different insurance companies. So it may be worth giving them all a try to get as many quotes as you could. Comparing several quotes is the only way to find the cheapest one for you. 

Get Tennessee workers comp insurance quotes online from insuretechs 

Online “insuretech” companies are insurance companies that operate completely online. They tend to be newer companies and have been founded in the digital age. So, they tend to offer a much better digital experience. They all sell workers comp insurance directly to businesses and tend to have lower rates. You can get a quote, file a claim, receive a certificate of insurance and pay your bill, all online, and within 10-15 minutes. 

Some such companies include:

  • biBERK: Best for low-cost coverage. biBERK is a subsidiary of Berkshire Hathaway and  claims that they could save you at least 20% on premiums 
  • THREE: Best for simple and comprehensive policy with affordable rates. THREE is another Berkshire Hathaway’s subsidiary. They believe that each small business insurance should have all coverage that they need in a policy document of less than 3 pages. 
  • Pie: Best for comprehensive industry coverage. Pie has made rapid progress to expand their coverage to a wide range of industries. If you couldn’t get quotes for your company at biBERK or THREE, you may want to give Pie a try. 

biBERK gave us this quote for a computer software business with five employees and $500,000 in payroll. 

Of course, you may get a different quote, even for a business with similar attributes. But it’s usually pretty easy to get a quote from an online insuretech company, so you have nothing to lose (except a few minutes’ time) by getting a quote. 

Workers comp insurance requirements in Tennessee

All Tennessee businesses with five or more full- or part-time employees are required to buy workers compensation insurance coverage. All businesses in the construction industry are mandated to get coverage when they hire their first employee. Corporate officers are automatically included on workers comp insurance policies, but they may choose to not get coverage for themselves. 

Workers comp insurance exemptions in Tennessee 

Sole-proprietors, partners, and limited liability company (LLC) members are not required to get workers comp insurance in Tennessee. However, they can choose to get coverage for themselves. 

Penalties for not having workers comp insurance exemptions in Tennessee 

You could face the following penalties if you fail to meet Tennessee’s workers comp requirements: 

– 25 percent penalty for failure to pay — or to timely pay — temporary disability benefits
– Penalty of up to $10,000 or more for failure to timely comply with an order to get coverage
– Penalty of $1,000 per day in the event of a failure to comply with an order to get coverage after 21 days
– Additional financial and civil penalties.  

What does workers comp insurance cover? 

Workers compensation insurance provides employees with benefits in case they are injured on the job, and it provides employers with some protection from lawsuits filed by injured employees. 

Workers compensation provides employees with payments for:

  • Medical bills
  • Doctors visits
  • Hospital stays
  • Physical therapy
  • Prescriptions

In addition, employees are entitled to receive benefits for lost wages. They can also collect for temporary disability benefits, either total disability if the employee can’t work at all, or partial temporary disability benefits if they can work but with restrictions (not lifting anything over 20 lbs, restricted to desk duty, etc). 

If the employee is permanently disabled, workers compensation will provide them with benefits. Should the worst happen and an employee is killed, workers comp provides death benefits and funeral costs.

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