Workers’ compensation insurance
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What is workers’ comp insurance?
Workers’ compensation insurance will pay medical costs, lost wages, and other expenses if a worker becomes injured or ill because of work related reasons. Having it prevents employees from suing you over these things.
Workers comp insurance is required in almost all states, except Texas. Each state laws stipulates worker comp insurance a bit differently and changes often. Learn more about the latest changes in workers comp insurance and why small businesses need to know them.
What does workers’ comp insurance cover?
If your small business hires people, you probably need workers’ comp coverage. Workers’ comp pays for medical care, lost wages, disability benefits, and more if someone gets sick or becomes injured because of job related reasons.
It is required by all states in the US. And most states requires you to have workers comp insurance coverage as soon as you hire the first employee. Check your state’s workers’ comp website to find out for sure.
How much does workers’ comp insurance cost?
Your workers’ comp rate is calculated primarily based on the size of your payroll—the bigger your payroll, the more you’ll pay for workers’ comp. The other important factor determining the cost of workers’ comp insurance is the industry you company is in. The riskier your industry is, for example, construction or roofer, the more expensive your workers’ comp coverage is. Your company’s location also plays a role.
On average, small businesses pay $150 a month or $1,800 a year for their workers’ comp policy.
Whatever you pay, though, it’s less expensive than going uninsured: according to the National Safety Council, the average cost of a workers’ compensation claim is $40,000! It is not worth skipping it.
Learn more at how much does workers’ comp insurance cost
How to calculate the premiums of workers comp insurance?
Workers comp insurance premiums are calculated by the following formula:
- Workers comp premium = Classification rate x Experience modification rate x (Payroll / 100)
in which:
- the classification rate is a 4-digit number assigned to each employee based on what sort of work they do, for example: secretarial work, cleaning work, driving work, or construction work, etc. The riskier the job, the higher the classification rate.
- experience modification is how your business compares to other similar businesses. It’s based on things like how old the business is and the number and severity of workers comp claims. Experience mod rates start at 1.0 and go up if you’ve had claims and down if you don’t. A credit experience mod rate is anything less than 1.0 and a debit mod is anything more than 1.0
Learn more here.
Cheap workers comp insurance
Since workers comp insurance is required by state laws, you can’t skip it. However, you can still find the cheapest coverage for your business by following the tips below:
- Shop around for the best value. Get quotes from a few companies and compare them to find the right coverage for you at a reasonable cost. Learn more at the best workers comp insurance companies.
- Review before you renew. Make sure you get new quotes before you renew your policy.
- Safety-first: Make sure your business operations follow all safety standards required or recommended by your industry and regularly conduct safety training for your employees. This will save you on the workers comp insurance cost.
- Take advantage of discounts. If they’re not offered to you when getting a quote, ask about any discount that you can be eligible for.
Learn more about the cheapest workers comp insurance companies.
The top states where the most small businesses looking for workers’ compensation insurance
Who needs workers comp insurance?
If your small business hires people, you probably need workers’ comp coverage. It is required in almost all states, except Texas, and for any industry. It is also required for some unusual jobs such as nannies and independent contractors or self-employed. Learn more at the best nanny workers comp insurance companies and the best workers comp insurance for independent contractors and self-employed.
There are some exclusions in some states. Be sure to check with your state’s workers’ compensation laws. For example:
- In California, sole proprietors don’t have to have workers compensation, unless you’re a roofer.
- In Florida, if you have more than four employees, you’re required to have workers compensation insurance, even if they are all part-timers. If you’re in construction, you’re required to have it if you have more than one employee.
- Texas is the only state that doesn’t require workers compensation insurance. It’s optional.
Only businesses that contract with any government entity are required to carry workers compensation insurance.
Why buy workers’ comp insurance from BravoPolicy?
Great question! Here are three good reasons:
- You’ll probably pay less for your workers’ comp insurance with BravoPolicy. Our customers save 20% on average.
- We can get your small business covered in about 10-15 minutes.
- You can manage all of your business insurance needs through our online portal. No paperwork needed. No need to wait on the phone for hours to speak to customer service.
Workers’ comp insurance FAQs
Does my company need workers’ comp coverage?
The answer is YES in all states, except Texas, if your business has employees, even just one. There are some nuances in each state’s workers’ comp laws. Check online with your state’s workers comp agency to find out for sure.
Do self-employed or independent contractors need workers’ compensation insurance?
That depends on your location and other factors, since workers’ comp laws varies by states. However, if you hire someone, even just part-time, to work for your business, you will need to provide workers’ comp coverage.
If only you work for your own business, you may not be required to have the coverage. However, it is still a good idea to have self-insurance.
Who is exempt from workers’ compensation insurance?
Certain sole proprietors may not need it, along with people who hire domestic help and some agricultural businesses. Check with your state workers’ comp agency to find out for certain.
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