Does Your State Require Your Business to Carry Workers' Compensation Insurance?

From heavy lifting to bunched-up rugs, there are a lot of ways your employees can end up injured at work. In fact, workplace injuries are so common that an employee is injured on the job every 7 seconds in the United States. And when a workplace injury happens to one of your employees, you could be held liable for their medical bills, lost wages, and more. 

Luckily, you can take out a workers’ compensation policy, covering lost wages for the employee, medical expenses related to any injury incurred at work, and legal protection for you as the employer. While it has its limits, it’s sufficient protection for you and your company in the majority of situations. 

Make sure you know when you’re required to carry—and don’t make rock climbing your next team-building exercise.

Who is Required to Carry Workers' Compensation Insurance

The majority of states require that employers carry workers’ compensation insurance in at least some situations. In some cases, this kicks in as soon as the first person is employed, while others require it only after a certain number of employees are hired, whether full-time or part-time. 

Sometimes, states require that businesses have this insurance the moment they employ anyone, anywhere.

States that require all employers to carry workers’ compensation policies include:

Other states waive this requirement until there’s a worker, paid or unpaid, performing duties at the place of business. 

The following states require coverage as soon as one employee is hired:

Then there are states which require coverage, but exactly when that requirement kicks in varies. These states are: 

You may have noticed one state missing from these lists: Texas. That’s because Texas is the only U.S. state that doesn’t have any requirement for workers’ compensation coverage. 

If you operate a business in the Lone Star State, keep in mind that this doesn’t mean you won’t be held liable if an employee is injured at your place of business; it only means that the state won’t penalize you for not having coverage. It’s still recommended that employers have coverage in place for their own protection.

Where to Get Workers' Compensation Insurance

For workers’ compensation insurance, there are both private and public options. Private companies can be local or national, while public options are state-run programs. In some states, employers are required to use the state-funded programs. These states are:

• North Dakota
• Ohio
• Washington
• Wyoming

In all other states, including California, business owners get to decide what coverage provider is best for them. 

If you choose a private insurance provider, you need to do your due diligence. Whether you opt for a large, national insurance company or one that’s small and located near you, make certain the provider you choose understands the laws in your state and drafts a policy that gives you, at a minimum, the coverage you’re legally mandated to carry. Good agents will also go the extra step and offer comprehensive workplace safety and risk management programs. 

You can purchase these policies directly through the provider or with a broker or independent agent. In states where employers have the freedom to choose from a variety of insurers, opting for a broker can make it easier to wade through the options and select the one that offers precisely the coverage you need at a price that works for you.

In California, Leap | Carpenter | Kemps Insurance Agency has been providing businesses with Workers’ Compensation Insurance for decades. We understand the nuances behind California law on Workers’ Compensation Insurance and can make sure you get the coverage that’s right for your business.

How Much Your Premiums May Be

As with any type of insurance coverage, the premiums you pay for a workers’ compensation policy will vary between providers and based on how much coverage you require. Premiums for workers’ compensation are generally calculated per $100 of employee wages. These rates can be as low as $.75 per $100 in Texas to as much as $2.74 per $100 in Alaska. 

To make this more concrete, let’s say you have one employee and you pay them $40,000 per year. At the $.75 rate, the workers’ compensation premium for them would be $300 annually. At $2.74, it would be $1,096 each year. 

You can also save money on your Workers’ Compensation through what’s known as an experience modification. An experience modification, or ex-mod for short, is a rating system that can either decrease or increase your annual premium. When your ex-mod is positive, it means that you’ve been keeping your workers’ comp claims at a minimum, and you’ll see a decrease in premiums. 

If you own a business, it’s more likely than not that you’re legally required to carry a workers’ compensation policy. While this is an additional expense, it’s one that can save you money in the long run.

Don’t be afraid to shop around for the coverage that fits both your needs and your budget, but make certain you don’t skip out on workers’ compensation insurance altogether.

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Get the Workers' Compensation Coverage You Need!

At Leap | Carpenter | Kemps Insurance Agency, we have decades of experience helping employers navigate the Workers’ Compensation Insurance maze. We can help you understand the coverage requirements and help you get the coverage that’s right for you and your employees. Contact us today.