Workers’ Compensation Insurance
Coverage for Workplace Injuries — and an Important Part of Protecting Your Business
Workers’ Compensation Insurance Coverage for Workplace Injuries — and an Important Part of Protecting Your Business
Employees are an important part of your business, but workplace injuries can happen in nearly any industry.
An employee can be injured while lifting equipment, driving for work, operating machinery, working at a job site or simply performing everyday job responsibilities.
Workers’ Compensation Insurance may provide benefits to employees who experience qualifying work-related injuries or illnesses while also helping businesses address certain costs associated with workplace injuries.
John Scott Insurance helps employers understand their workers’ compensation exposures and how this coverage fits into their overall business insurance program.
What Is Workers’ Compensation Insurance?
Workers’ Compensation Insurance is designed to provide certain benefits when an employee experiences a qualifying work-related injury or illness.
Depending on the situation and applicable state requirements, benefits may include:
- Medical expenses
- Rehabilitation expenses
- A portion of lost wages
- Disability benefits
- Certain death benefits
- Other benefits established by applicable workers’ compensation laws
Workers’ compensation requirements and benefits vary by state.
Businesses should review their individual obligations with an insurance professional and appropriate legal or regulatory resources.
What Does Workers’ Compensation Insurance Cover?
Medical Expenses
Workers’ compensation may help pay eligible medical expenses associated with a covered workplace injury or occupational illness. This may include certain doctor visits, hospital care, treatment, medication and rehabilitation.
Lost Wages
When a qualifying work-related injury prevents an employee from working, workers’ compensation may provide a portion of lost wages according to applicable laws and policy provisions.
Rehabilitation
Some injured employees may require physical rehabilitation or other services as part of their recovery and return to work.
Disability Benefits
Workers’ compensation may provide certain disability benefits when a qualifying workplace injury temporarily or permanently affects an employee’s ability to work.
Death Benefits
In certain circumstances, workers’ compensation may provide benefits to eligible dependents following a work-related employee fatality.
Does My Business Need Workers’ Compensation Insurance?
Workers’ compensation requirements vary by state and business circumstances.
Factors can include:
- Number of employees
- Business structure
- Type of work performed
- State where employees work
- Employee classifications
- Use of subcontractors
- Other state-specific requirements
A business operating in more than one state may also have different requirements depending on where its employees are working.
John Scott Insurance works with businesses throughout multiple Midwestern states. Employers need to review the requirements that apply to their specific operations.
What Affects the Cost of Workers’ Compensation Insurance?
Workers’ compensation premiums are influenced by several factors.
- Payroll
- Employee job classifications
- Type of work performed
- Number of employees
- Claims history
- Experience modification factor
- State
- Safety practices
- Business operations
- Use of subcontractors
Two businesses with the same number of employees may have very different workers’ compensation costs because the type of work employees perform can create very different levels of risk.
For example, an office employee generally has different workplace exposures than a roofer, construction worker or tree climber.
What Are Workers’ Compensation
Class Codes?
Workers’ compensation class codes are used to categorize employees based on the type of work they perform.
Different types of work have different levels of risk.
The classifications assigned to a business can affect its workers’ compensation premium.
Accurate classifications are important.
Businesses should review their operations and employee duties carefully rather than assuming every employee should be classified the same way.
Accurate Classification Matters
Employee duties and business operations should be reviewed carefully when considering workers’ compensation classifications.
What Is an Experience Modification
Factor?
Businesses with sufficient workers’ compensation history may have an experience modification factor, often called an experience mod or EMR.
The experience mod is one factor that may affect workers’ compensation pricing.
It generally compares a business’s actual workers’ compensation loss experience with expected loss experience for similar businesses, according to the applicable rating methodology.
A company’s claims history can therefore have an impact beyond the immediate cost of an individual claim.
Safety + Claims Management
This makes workplace safety, claims management and return-to-work practices important parts of a company’s overall workers’ compensation strategy.
Why Is There a Workers’ Compensation Audit?
Workers’ compensation premiums are often initially based on estimated payroll and business operations.
At the end of the policy period, the insurance carrier may conduct an audit to determine the business’s actual payroll, employee classifications and other relevant information.
That audit can result in an adjustment to the final premium.
Business owners should keep accurate payroll records and notify their insurance professional when there are significant changes in:
- Payroll
- Employees
- Job duties
- Business operations
- Subcontractor use
- States where work is being performed
This can help reduce surprises at audit time.
Workers’ Compensation for
Contractors
Workers’ compensation is particularly important for contractors because employees may work around:
- Heights
- Ladders
- Power tools
- Heavy equipment
- Construction materials
- Vehicles
- Excavation
- Active job sites
- Other trades
John Scott Insurance also operates Contractors Insurance Agency, a specialized division focused on contractors and construction-related businesses.
Explore Contractors InsuranceWorkers’ Compensation as Part of Your Business Insurance Program
Workers’ compensation addresses employee injury exposures, but businesses often need several different types of coverage.
Depending on the company, this may include:
General Liability
Commercial Property
Commercial Auto
Business Owners Policy
Equipment / Inland Marine
Commercial Umbrella / Excess Liability
Cyber Insurance
Industry-specific coverage
Frequently Asked Questions About Workers’ Compensation Insurance
Is Workers’ Compensation Insurance required?
type of business and other circumstances. Businesses should review the
requirements that apply to their individual operations.
What does Workers’ Compensation Insurance pay for?
rehabilitation, disability and death benefits for qualifying
work-related injuries or illnesses, subject to applicable law and
policy provisions.
Does Workers’ Compensation cover the business owner?
on business structure, state law and policy elections. Business owners
should discuss their individual circumstances with their insurance
professional.
Are independent contractors covered by Workers’ Compensation?
state and circumstances. Businesses should not assume that calling
someone an independent contractor eliminates workers’ compensation
considerations.
Do subcontractors need their own Workers’ Compensation Insurance?
workers’ compensation requirements, certificates of insurance and
carrier expectations before work begins.
What happens if my payroll increases during the year?
an increase in payroll may affect premium. Businesses should discuss
significant payroll changes with their insurance professional rather
than waiting until the year-end audit.
Why does my insurance company audit my Workers’ Compensation policy?
payroll and operations. An audit allows the carrier to compare those
estimates with actual information for the policy period and adjust
premium when necessary.
What is an experience mod?
to eligible businesses and generally reflects the company’s loss
experience compared with expected losses for similar businesses under
the applicable rating methodology.
Can one Workers’ Compensation policy cover employees working in multiple states?
Businesses should tell their insurance professional every state where
employees are working so the appropriate state requirements and policy
structure can be reviewed.
Does General Liability cover employee injuries?
Workers’ Compensation Insurance rather than General Liability Insurance.
Let’s Talk About Your Workforce
As your business changes, your workers’ compensation exposures can change with it.
New employees, increased payroll, new job duties, subcontractors, expansion into another state or changes in operations can all affect your workers’ compensation program.
John Scott Insurance can help you review your workforce, classifications, payroll, claims history and current coverage as part of your overall business insurance strategy.