Are you a contracting business that retains employees in the United States looking for liability insurance? If so, our insurance team at Contractors Liability® is ready to answer some common questions for you and provide you with a free quote as well.
Worker’s compensation appears to be directly connected to the American values most dear to us. After all, nothing says that Americans value their workers quite like paying for accidents that occur when they’re on the job. This type of coverage in America was a result of successful activism made by labor unions in the early 1900’s. However, the roots of the actual coverage itself dates to Prussia in 1871, where the Employer’s Liability Law of 1871 sought to quell some of the social uprisings occurring among Prussian workers.
Whatever Prussian Chancellor Otto Von Bismarck did back then, just so happened to work, and it’s laid the foundation for our own laws related to the subject. Whatever way you slice it, it’s an employer’s legal duty to provide worker’s compensation in most states.
The specifics of worker’s compensation can be confusing, but Contractors Liability can help you understand this type of coverage, why you need it, and what it entails.
What is Worker’s Compensation?
Every employee gets sick at some point in time while they are on the job, but that’s not usually the fault of the employer. However, health issues can be part of the job description, especially in high-risk jobs. Contracting positions, excavators, electricians, and other high-risk construction jobs can leave employees at greater risk of becoming sick, disabled, or worse on the job. This is why worker’s compensation is so important for contracting work.
Worker’s compensation covers:
- Compensation for Lost Wages
- Example: An employee is out of work for three months due to a work-related injury. Worker’s compensation takes care of the wages that they are missing out on due to their inability to work.
- Medical Benefits
- Example: An employee has broken a bone in an accident that is directly related to the work they do for you. A worker’s comp claim ensures that their medical expenses for this injury are covered.
- Disability Benefits
- Example: An employee is out of work for an extended period because their body physically cannot do the work that is required of them any longer, and their inability to do that work is caused by their position at your company.
- Rehabilitation Benefits
- Example: An employee suffered a crippling injury at work, and now requires rehabilitation services in order to be pain-free and potentially get back to work. Worker’s comp covers the cost of rehabilitation.
- Example: An electrician employed under your company dies on the job. Worker’s compensation insurance will cover the cost of fees related to life insurance payouts or funeral expenses.
- Liability Insurance for Legal Defense
- Example: A former employee sues the company for health reasons. Worker’s compensation will cover the cost of your defense.
Who Needs Worker’s Compensation?
Worker’s compensation is available in all 50 states, but not every state requires that your company provide worker’s compensation for employees. Alaska, California, Colorado, Connecticut, Delaware, Washington D.C., Hawaii, Illinois, Iowa, Kansas, Kentucky, Maryland, Massachusetts, Michigan, Mississippi, New Hampshire, New Jersey, New York, North Carolina, Ohio, Oklahoma, South Carolina, Utah, and Washington all have worker’s compensation regulations. However, each state has different regulations as to what type of employees are covered. Check with your insurance agent, or give us a call, to find out what type of coverage your state requires.
Are There Any Exclusions to Worker’s Compensation Laws?
Worker’s compensation is an intricate concept, and many of the laws are not as straightforward as they would seem. However, there are some general exclusions to worker’s compensation that make understanding it a little easier on employers.
- For employers with fewer than 3 employees, worker’s compensation is usually not required.
- Some states allow you to self-insure rather than go through an insurance agency for worker’s compensation
- Some states do not include subcontractors on this list
Whether or not you need worker’s compensation is ultimately a judgment call dependent on multiple factors. Your insurance provider will be able to help you understand the best course of action for your business.
How Much Will Worker’s Compensation Cost?
Unlike many insurance policies, your type of business will heavily influence the amount you pay for worker’s compensation. This is because higher-risk positions also have a higher potential for injury. These other things also determine the cost of your worker’s compensation policy:
• The age of your company
• Your company’s reputation
• Your company’s insurance track record
• Where your company is located
Here are some examples of cost versus risk:
- Office employee: low risk. Average around .30 per $100 worth of payroll for this employee.
- Contractor: high risk. Average around $4 per $100 worth of payroll for this employee.
- Long-haul trucker: Extreme Risk. Average around $10 per $100 of payroll for this employee.
Why Choose Contractors Liability for Your Worker’s Compensation Needs?
Worker’s compensation is something that many potential employees look for when it comes to applying for a job – especially for a high-risk job like a contractor position. Even if your state doesn’t require worker’s compensation, it can save you quite a bit of money should a lawsuit occur.
That said, understanding worker’s compensation is often easier said than done. Policies distinguish themselves from others via state laws, business types, and many other different applications. Obviously, this could make obtaining the right kind of worker’s compensation difficult. Contractors Liability takes the work out of understanding worker’s compensation, preferring instead to show you how you can best cover your employees and yourself in the event of an accident.
Our services include representation by a licensed insurance agent, an exclusive selection of A-list insurance providers, and customer support prior to, during, and after your coverage.
Worker’s Compensation FAQs
Do I need to have worker’s compensation?
Different states have different worker’s compensation regulations. In many states, worker’s compensation is compulsory when you have more than a certain number of employees working a certain number of hours. No two states are alike when it comes to the coverage they require, so it is best that you speak with a licensed insurance agent regarding what is required and what is left to your discretion.
Do worker’s compensation rates change?
Generally, a worker’s compensation policy lasts over a span of 3 years and is renewed after the third. Monitoring happens for the first three years you have coverage, after which you might notice changes in either one or multiple experience modification factors. If during that period of monitoring you had fewer claims than average businesses in your industry, you might notice your rate go down. You could even earn a refund!
It’s easy to get overwhelmed trying to negotiate the terms of a worker’s compensation policy, but Contractors Liability is here to help. Contact us via web or call us at (866) 225-1950 for a 5-minute quote or for more information.
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