Workers’ compensation insurance is essential for businesses to protect their employees and themselves from the financial consequences of workplace injuries. However, many business owners have questions about how workers’ compensation insurance works, what it covers, and how to find the right policy. Here are the 10 most common questions business owners ask:
1. What Does Workers’ Compensation Insurance Cover?
Workers’ compensation insurance provides coverage for employees who suffer work-related injuries or illnesses. The policy typically covers:
- Medical expenses related to workplace injuries
- Lost wages for employees unable to work due to injury
- Disability benefits (temporary or permanent)
- Rehabilitation costs
- Death benefits for the families of employees who suffer fatal injuries
Without workers’ compensation insurance, employers could face lawsuits and financial liabilities.
2. What Are My Policy Options?
There are several ways to purchase workers’ compensation insurance:
- Stand-alone policies from insurance companies
- Payroll/workers’ compensation plans integrated with payroll services
- Professional Employer Organization (PEO) plans, which bundle multiple HR and insurance services
- State and assigned risk plans for businesses that cannot get coverage through traditional insurers
3. How Is the Cost of Workers’ Compensation Insurance Determined?
The cost of workers’ compensation insurance depends on several factors:
- Industry and job classification codes (some jobs are riskier than others)
- Payroll size (higher payrolls mean higher premiums)
- Claims history (businesses with fewer claims pay lower rates)
- Experience modification rating (EMR) (a metric that reflects past claims)
4. Why Are There Audits at the End of the Policy Period?
Insurance companies conduct workers’ compensation audits to verify that businesses paid the correct premium based on actual payroll and job classifications. If a business underestimated payroll, they may owe additional premium. If they overestimated, they may receive a refund or credit.
5. If I’m a Contractor, Can I Split Payrolls by Class Code?
Yes, but with strict conditions. If an employee performs multiple job functions (e.g., roofing and carpentry work), some states allow split payroll classification. However, detailed payroll records must be maintained. Otherwise, insurers classify the worker under the highest-rated job class, leading to higher premiums.
6. Where Can I Buy Workers’ Compensation Coverage?
Businesses can buy workers’ compensation insurance from:
- Private insurance carriers (for businesses that qualify for standard coverage)
- State-run programs (for businesses in monopolistic states or assigned risk pools)
- Professional Employer Organizations (PEOs) (which provide bundled HR and insurance services)
- BGES Group, one of the Tri-State’s top workers’ compensation specialists, helping businesses secure cost-effective coverage
7. What Happens If I Hire 1099 Workers?
Misclassifying 1099 independent contractors as non-employees can lead to serious legal and financial consequences. Many states and insurers require businesses to carry workers’ compensation insurance for contractors unless they have their own coverage. If an uninsured 1099 worker gets injured, your business could be held liable.
8. What If My Employees Work Out of State?
If your employees work out of state for more than three days, you need to ensure that your workers’ compensation policy provides coverage in that state. Some states require businesses to purchase workers’ compensation insurance specific to their jurisdiction. Failure to comply can result in fines and denied claims.
9. What Does Employer Liability Cover?
Employer liability insurance, included in most workers’ compensation policies, covers lawsuits related to workplace injuries. While workers’ compensation insurance generally protects businesses from being sued by injured employees, employer liability covers:
- Third-party lawsuits (e.g., if an employee sues an equipment manufacturer and the manufacturer sues your business)
- Consequential injuries (e.g., if an injured employee’s family member files a lawsuit)
- Dual capacity claims (e.g., if the employee sues your business in multiple roles, such as employer and manufacturer of a product)
10. Is There a Way to Pay Based on Past Monthly Payroll?
Yes, some insurers offer pay-as-you-go workers’ compensation insurance. Instead of estimating payroll for the year, you pay premiums based on actual monthly payroll. This method helps businesses improve cash flow and avoid large audit adjustments at the end of the policy period.
Get Expert Help from BGES Group
Navigating workers’ compensation insurance can be complex, but BGES Group specializes in helping businesses secure the right coverage. With decades of experience, they offer tailored solutions, including traditional policies, pay-as-you-go options, and PEO plans.
Contact BGES Group for Assistance:
- Contact Person: Gary Wallach – 914-806-5853
- Email: bgesgroup@gmail.com
- Website: www.bgesgroup.com
If you need help securing workers’ compensation insurance, turn to BGES Group, the trusted name in the Tri-State area.