Workers’ Comp Insurance: Latest Changes Small Businesses Need to Know

Thang Truong
Thang Truong
Updated on:

Most business owners think of workers’ compensation insurance as a once and done thing. They buy it and forget it.

The truth is that workers’ comp evolves all the time and it’s important to stay on top of changes to it. If you don’t, you may be spending money on unnecessary coverage, or worse, have too little protection, which could expose your organization to significant state fines and legal exposure.

In this article, we will:

  • Explain the latest changes to workers’ compensation programs so you are able to respond to them
  • Provide basic information about workers’ comp coverage to help ensure you have adequate protection for your employees
  • Share information about five insurance companies that are uniquely able for different reasons to keep your workers’ compensation coverage current

We’ll cover:

Recent changes to workers’ compensation 

Here are five evolutions and revolutions in workers’ comp that small business owners need to be aware of:

  1. Safer work environments. Businesses have been partnering with their insurance providers and government agencies to improve safety in their workplaces and job sites. Leading insurers, like the ones on our list, provide clients with research, programs and information that can help them keep their employees safe. Government agencies like the United States Department of Labor’s Occupational Health and Safety Administration (OSHA) have good resources to help with this, as well. Implementing these programs has a proven track record of reducing the chances employees will get injured or sick because of work related reasons. This cuts the number of workers’ comp claims made by employers who create safe workplaces. Over time, this reduces workers’ comp costs. If you haven’t implemented the latest worker safety strategies and tactics, it’s time. An investment in them will pay off many times over in improved worker safety and reduced rates on workers’ comp policies.
  2. More gig workers. More and more, companies are turning to independent contractors, freelancers, individual delivery people, and consultants. They help businesses expand in a controlled way, become efficient, grow their talent pools and bring in fresh, outside thinking. Some states require that these types of workers be covered by workers’ compensation coverage. If you’re not sure about the rules in your state, you should search for information online or consult with an insurance expert familiar with your state’s rules.
  3. Advanced technology. New technologies like telehealth and telemedicine, advanced record keeping, and artificial intelligence make it possible for workers who become injured or sick because of job related reasons to get faster treatment, more personalized care, easy access to medication, and greater input from specialized healthcare experts. All these things help workers return to their jobs faster, reducing total medical and claim costs, which can lower workers’ comp premiums. Is your insurer using the latest medical technology to help workers get better faster? If not, you should find out. You owe it to yourself, your business, and the well-being of the people who work for you to make sure your insurance company is cutting edge, helping speed employees back to health and controlling your costs.
  4. Definition of workplace illness. COVID-19 has forced many states to reconsider what a workplace illness really is. If someone caught it while on the job, and could prove it, and became debilitated from it, should they receive workers’ comp coverage? Many states have already decided that the answer is YES. It’s worth watching this issue because it could turn workers’ comp on its head by dramatically expanding the definition of a workplace illness.
  5. Regulatory and legislative reform. States are constantly changing workers’ comp laws. It’s  important to stay up to date on those of your state. If you’re not confident about being able to do so, you should consider working with one of the insurers on our list below. They’ll be able to help.

Workers’ compensation laws in the United States

Carrying workers’ compensation insurance is a legal requirement in most states. It is highly likely that if you have one or more employees, you will have to purchase it.

If you don’t have coverage when it’s required, it could result in severe penalties, ranging from significant fines to stop work orders all the way up to prison terms. 

You can search online to find out about your state’s workers’ comp requirements.

>> MORE: Workers Comp Insurance Requirements by States

What does workers compensation insurance cover?

Worker’s comp helps cover:

  • Accidents and injuries: Workers’ compensation pays medical costs if an employee gets injured on the job
  • Illness: If a worker is exposed to harmful chemicals or allergens in the workplace that cause an illness, their medical care is covered by workers’ comp
  • Lost wages: A work-related injury or illness often forces employees to take time off. Workers’ comp helps replace the lost wages of injured or sick employees while they’re recovering
  • Ongoing care: If a workplace injury or illness requires an employee to need long term care, such as physical therapy, workers’ compensation will pay for the treatment
  • Funeral costs: If an employee passes away because of a job-related incident, workers’ comp pays funeral costs up to a certain limit
  • Repetitive injury: If a worker is injured because of ongoing repetitive job related strain, such as carpal tunnel syndrome, workers’ comp will pay for therapy
  • Disability benefits: If an injury is so severe an employee never returns to work, or doesn’t for a long time, workers’ comp will pay medical costs and some lost wages over the long term.

What doesn’t workers compensation insurance cover?

Workers’ compensation insurance does not cover things like:

  • Injuries to independent contractors, clients or customers
  • Wages for temporary employees while recovering from a work-related injury
  • Employees who are intoxicated or high when they’re injured
  • OSHA fines
  • Injuries that occur after an employee has left work 
  • Vandalism or intentional injuries.

How is workers compensation insurance different from general liability insurance?

Workers comp only covers people who work for you. If a client, customer or random person is injured at your workplace or job site, general liability insurance will cover it. General liability insurance covers bodily injury and damage caused by you or an employee to someone else’s property.

>>MORE: Best General Liability Insurance Companies

How much does workers compensation insurance cost?

The cost of your workers’ comp premium is based on a number of factors, including your:

  • Number of employees and size of payroll
  • Industry and type of work
  • Workplace risks
  • Company claims history
  • Business location 
  • Business age or years in operation.

Taken together, all these things will determine your ultimate premium cost.

>>MORE: How Much does Workers Comp Insurance Cost?

How to find cheap workers compensation insurance

In most states, except for Ohio, Wyoming, Washington and North Dakota, which require that businesses purchase workers’ comp through a state fund, businesses are able to choose their own workers’ comp insurance provider. You owe it to yourself to compare coverage and costs from several insurers,along with a state fund if one is available to you. They have different ways of calculating premium costs and you will likely find a range of prices. You can select one that offers you the coverage you need at the best possible cost.

>>MORE: The Cheapest Workers Comp Insurance Companies

How to file workers’ comp claims

You should be able to find everything you need to file claims on the workers’ comp page of your insurance company’s website or state fund’s site. If a claim is rejected by an insurer, it can usually be appealed through a state’s workers’ compensation agency or department.

We checked out the top workers compensation companies to find the ones that are the most innovative, helpful and forward thinking.

  • Travelers: Most innovative workers’ comp insurance provider
  • Liberty Mutual: Best for businesses that want to stay ahead of workplace safety trends
  • biBerk: Best for low-cost cutting-edge workers’ comp coverage
  • AmTrust Financial: Best for customized and cutting-edge coverage
  • State insurance funds: Best for businesses that want to get state-sponsored coverage that meets state requirements 

Travelers: Most innovative workers’ comp insurance provider

Travelers is the top provider of workers’ compensation coverage in the United States. One of the reasons it became a leader is because the company is known for fostering a culture of innovation and forward thinking. You can feel confident that if you partner with Travelers, you’ll have access to the information and advice you need to ensure you have the workers’ comp coverage you need to protect the valued people who work for you.

Travelers is also known for its high level of customer service, flexible solutions, responsiveness and cutting-edge innovation. Travelers also uses its extensive experience to help businesses reduce risk, which can result in lower premium costs. It provides access to care that can speed the return to work for injured or sick workers.

In the end, Travelers offers quality cutting-edge workers’ compensation protection for businesses in many industries. You owe it to yourself to see if this leading insurer could be the right workers’ comp provider for your business.

In many cases, workers’ comp insurance can seem very much the same from provider to provider.

Liberty Mutual is clearly different. 

They understand that employee absences because of work related injuries and illnesses can have a big impact on company finances, productivity, morale, reputation and other factors.

That’s why the firm uses its more than one hundred years of experience to help businesses improve workplace safety and protect employees using the latest strategies and tactics. Not only is this the right thing to do, it also helps businesses save on their workers’ comp costs.

Teams from Liberty Mutual work with businesses to:

  • Identify work site hazards and risks
  • Recommend ways to reduce the risk of accidents and illnesses
  • Resolve claims quickly and fairly
  • Support injured workers so they can recover faster and get back to work.

Businesses that partner with Liberty Mutual can feel confident knowing they will benefit from working with knowledgeable underwriters and risk control professionals with a broad and deep understanding of the workers’ comp universe and types of claims across industries. They also have dedicated claims specialists who are able to advocate for injured workers, which makes it possible to achieve better outcomes.

In addition to all of this, the firm is known for its high quality research and education materials, which it makes available to clients for free.

All this might seem expensive. However, the truth is that Liberty Mutual’s focus on reducing risk makes them highly competitive from a cost perspective.

biBerk: Best for low-cost cutting-edge workers’ comp coverage

biBERK is Berkshire Hathaway’s low-cost workers’ comp insurance provider. Even though you’re saving money on your coverage with biBerk, you can rest assured knowing you are still getting quality protection for your employees and access to the forward thinking experts that are part of Berkshire Hathaway’s vast network. biBERK is able to lower workers’ comp insurance costs by approximately 20 percent because it insures small businesses directly, without the added costs of having to work through a middleman or insurance broker.

AmTrust Financial: Tops for customized and cutting-edge coverage

AmTrust is an insurance provider that specializes in small business and workers’ comp coverage. It is known for its high level of service and willingness to work with businesses to help them get the coverage they need.

AmTrust and their agents make it possible for small businesses to customize their coverage based on their individual requirements, something many insurers are unable to do. The firm works closely with their agents to design the individual insurance packages businesses need. This ensures that all their coverage, including workers’ comp protection, is current and complete.

AmTrust has excellent customers service ratings and their coverage is surprisingly affordable especially when you consider the level of customization they offer.

State insurance funds: Best for businesses that want to get state-sponsored coverage that meets state requirements 

Instead of buying workers’ comp coverage from an insurance company, it’s possible, in some cases, to get it through a state insurance fund.

There are two types of state insurance funds: 

  1. Monopolistic state fund: Four states, Ohio, Wyoming, Washington and North Dakota, require employers to buy insurance through a state fund. This can limit the businesses in those states because they can’t shop around for coverage and they’re forced to buy additional worker’s compensation insurance protection from other sources for employees who work in other states.
  2. Competitive state fund: If your state offers a competitive state fund, you are allowed to obtain workers’ comp coverage from your state or a private carrier. It’s worth shopping for insurance through both sources if they’re available to you in order to find the best coverage at a fair price.

While insurance from a state fund is often more expensive than coverage from an insurance company, you’ll know your policy has been developed to meet state requirements.

>>MORE: Best Workers Comp Insurance Companies

>>MORE: Top 10 Workers Comp Insurance Companies by Market Share

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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