4 Things to Know When Shopping for a Workers' Comp Insurance Policy

If you have employees that work for your small business, you more than likely need a workers' compensation policy. When it comes to shopping around for workers' compensation insurance, there are a few things you need to know that will help you navigate this process.

1. Workers' Compensation Is Controlled at a State Level

First, it is essential to understand that there is no national standard for which businesses are required to carry workers' compensation. Instead, this is set at the state level, which is why you need to become familiar with your state's requirements.

Keep in mind that you will need a policy for each state your employees do work in unless you get an All States Endorsement on your policy. If your employees work at all outside state lines, you need individual coverage for those states.

In most states, coverage requirements for workers' compensation are also based on how many employees your business has. If you are the only employee of your business, you will not need a workers' compensation insurance policy in most states.

2. What Your Employees Do Matters

Second, with workers' compensation, what your employees do matter. Workers' compensation insurance policies all use a classification system based on the work that an employee does. This classification system correlates to the association of risk with that job and the likelihood that a claim will need to be filed.

You will have to sit down, write each employee's job title and duties, and figure out how each employee would be classified according to the system used by insurance providers for workers' compensation insurance.

3. How Your Employees Are Paid Matters

Next, how your employees are paid matters as well. You are going to need to estimate your annual payroll, as that impacts your coverage.

For full-time employees, you are going to need to estimate gross earnings. For part-time employees, you will also want to figure out what their average gross earnings will be. For hourly workers, you will need to estimate how much you are going to use your hourly workers throughout the year. You will need to audit your payroll at the end of the year, and you will then either get a credit or a bill from your workers' compensation insurance provider.

4. Always Inquire About Discounts

Like all forms of insurance, there are discounts that you can take advantage of with workers' compensation. You may be able to receive discounts for workplace safety programs and formal training programs for new hires. You can also increase the accuracy of your policy's price with monthly, instead of annual, payroll reporting and monitoring.

Workers' compensation requirements are based on individual state laws. With this policy, your workers' jobs and what they are paid will impact your coverage. Always ask about discounts that could apply to your business's coverage.

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