Workers Comp Insurance in Washington State: Everything You Need to Know

Thang Truong
Thang Truong
Updated on:

According to the US Bureau of Labor Statistics, private industry employers in Washington state reported 78,200 occupational injuries and illnesses in 2020. That was about 3.5 incidents for every 100 full-time employees in the state by calculation.

50,600 of the total 78,200 injury and sickness cases recorded in Washington were of a more serious type. In such cases, employees had to take days away from work, job transfer, or restrictions—commonly known as DART cases. These incidents happened at a rate of 2.3 per 100 full-time employees.

All of these numbers tell you why it is vital to carry worker’s compensation insurance. Asides that it is crucial for the safety of your workers, worker’s compensation is also a requirement by law in Washington state. 

However, Washington is not like every other state regarding worker’s compensation insurance. Washington is a monopolistic state, which means you must obtain your coverage via the Washington state fund.

In this article, we will discuss in detail what that means. We will also discuss how you can obtain worker’s comp insurance at the best prices in Washington state.  

What does worker’s compensation cover in Washington state?

In Washington, workers’ compensation insurance pays claim fees when an employee or a covered subcontractor is injured while working for your company. It also protects your company from additional legal liabilities and medical costs connected with an injured employee.

The following are some coverages under this policy:

Medical costs 

Workers’ compensation insurance covers medical expenditures incurred on sick or injured employees. Some of the covered charges under this coverage include the cost of an ER visit, necessary operations, and medical prescriptions. 

For example, if one of your employees slips and gets injured while working, this policy will cover his injury. This might also include long-term expenditures such as physical therapy or rehabilitation.

Wages and Income Benefits for Employees

Most business owners cannot afford to continue paying employees who are injured and unable to work. However, workers’ compensation income benefits in Washington will pay your employees a majority of their lost wages if they cannot work due to a work-related injury or sickness. 

For example, if an employee breaks their leg while at work, he might not resume work for some time until the leg heals. This coverage will provide payments to the employee to compensate for missed income until he is fully recovered. 

Disabilities, both short-term and long-term 

An injury can sometimes result in a temporary or permanent disability. Workers’ compensation pays for continuing medical expenditures and may even restore a part of lost income owing to the disability. 

For instance, if an employee lost his hand due to work-related harm, the employee may be awarded a lump payment (known as an Impairment Rating) for the loss of his hand. The payment will cover permanent impairment and some temporary disability benefits while he is recovering.

Illness in the Workplace 

Some work situations may offer occupational exposures to unforeseeable occurrences. For example, people that work in asbestos companies are prone to asbestosis, which can be fatal.    A workers’ compensation coverage would cover the expense of treating such sickness contracted while the employee is on his job.

Funeral Charges

Unfortunately, every year, about 50,000 people are killed at work in the US. A workers’ compensation policy is intended to pay the costs of these funerals and offer death benefits to the employee’s family. The state’s laws frequently determine the cash level of coverage.

Workers’ compensation requirements in Washington

Washington is one of four monopolistic states, along with Ohio, Wyoming, and North Dakota. A monopolistic state is one in which workers’ compensation insurance can only be obtained from a governmental fund and not from a commercial insurer. The Washington state’s workers’ compensation is managed by the Washington State Department of Labor and Industries (L&I).

In Washington, every firm with one or more employees must carry workers’ compensation insurance for its employees. This law covers both full-time and part-time workers.   

To obtain workers’ compensation insurance through the fund, each business must have a business license and an account with L&I. L&I will then classify the business using its algorithm, which determines coverage rates.

In the alternative, companies can opt for a self-insurance policy. Companies under this type of coverage do not buy from a private insurer or apply under the government fund. Instead, the companies agree to carry the risk of work-related injuries and illnesses on their own.   

But then, if an employer decides to be self-insured in Washington State, it must have at least $25 million in assets and an accident-prevention program. There are also a few other requirements the company must meet like the following:

  • The business must be at least three years old. 
  • The business must have earnings in the current year and two of the previous three years. 
  • Before applying for self-insurance, such a business must have an accident-prevention program in writing for at least six months.  
  • The business must have a liquidity ratio of at least 1.3:1 and a debt to net worth ratio of no more than 4:1

What are the exceptions for worker’s compensation insurance in Washington State? 

As we mentioned earlier, workers’ compensation insurance is required by Washington state law for full-time and part-time employees. However, there are several situations where a worker is excluded from the state’s workers’ compensation requirements. The following are some examples:

  • Domestic employees that work in only one house and do not work more than 40 hours per week 
  •  Gardening, maintenance, or repair workers at private residences 
  • Musicians and entertainers at specialized events 
  • A youngster under the age of 18 who works under his parent for agricultural labor

Sole proprietors and independent contractors do not have to get worker’s compensation insurance. However, they should consider getting one. 

It is important because your health insurance provider may not cover your claim if you have a work-related injury or illness. That means you’d have to pay your medical costs out of pocket, which might be especially difficult if you’re out of work while healing.

Workers’ compensation would cover your medical expenditures and provide partial income for the period you were unable to work.

How much does workers’ comp insurance cost in Washington State?

In Washington state, the estimated employer rate for workers’ compensation is $1.34 per $100 of insured payroll. Your cost is determined by a variety of factors, including:

  • Previous claims history
  • Location of your business  
  • Industry and Risk Factors
  • Employee Count 
  • Coverage limitations
  • Annual payroll 

Washington is an independent monopolistic state; therefore, it does not use the National Council on Compensation Insurance’s (NCCI) employee categorization system.

The Department of Labor and Industries establishes classification codes and premium rates. They are about 300 of these classification codes in total. Each pertains to various occupations such as roofing, machining, and food service. Each code contains a number that corresponds to the degree of risk that the State of Washington anticipates it will incur by insuring a new firm.

In that line, base premium rates are established to reflect how risky it is to ensure a company. Therefore, more accident-prone sectors will have higher base rates than safer occupations.

For instance, an employee working for a commercial construction business is more likely to have a potentially catastrophic occupational accident than a teacher working in a classroom. Therefore, the teacher’s employer will pay less for a premium compared with the employer of the construction worker.  

What happens if you do not provide workers’ compensation insurance in Washington state?

If you do not have workers’ compensation insurance, you may face various penalties and fines. Some of the possible penalties include:

  • Failure to pay a workers’ compensation claim: $1,000 maximum fine, or double the amount of premiums that should be paid
  • Noncompliance with record-keeping requirements: $500
  • Noncompliance with a legislative provision: $1,000

What is not covered by worker’s compensation insurance in Washington?

According to the laws of Washington, DC, every injury or sickness an employee suffers on the job is covered by workers’ compensation, regardless of how serious or minor it is. However, workers’ compensation does not cover injuries such as:

  • Injuries caused by purposeful self-harm or
  • Injuries caused by drug, alcohol, or fighting
  • Injuries that do not occur in the “course and scope” of the worker’s employment.

Workers’ compensation statute of limitations in Washington

The workers’ compensation statute of limitations in Washington state is one year from the date of injury. If the worker suffers from an occupational ailment, the statute of limitations is two years from when he identified the disease.

Workers’ compensation death benefits in Washington state

If a worker dies as a result of a work-related accident or sickness, a qualified survivor can receive a one-time payment and a monthly survivor’s pension. The benefit will also cover the burial expenses of the worker up to $5,000.

The dead worker’s spouse is automatically entitled to death benefits. If the worker’s children are legally dependent, they are also eligible. When there are no qualified persons to receive the payment, the money goes to a state fund.

Thang Truong

Thang Truong covers small business insurance and small business success at BravoPolicy. He is a licensed P&C insurance agent. Previously, he held product leadership positions at, Capital One, NerdWallet, and Mulberry Technology. He holds a MBA degree from UC Berkeley - Haas School of Business.

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