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Every state has different laws governing workers’ compensation insurance, so you’ll want to check with your state’s insurance commission or an insurance agent for specific details, but typically you’re required to carry workers’ compensation insurance if you have employees. In California, even if you have just one person working for you (although sole proprietorships are generally exempt), you need it. In Missouri, only firms with five or more employees or contractors of any size are required to carry workers’ compensation. Since you can be fined or even have a lien put on your property for failing to provide workers’ compensation coverage for your employees, this isn’t something you want to neglect.
What counts as an employee? Many states require that you carry workers compensation insurance for you domestic help, like the cleaning lady who comes in on a regular basis, your children’s nanny or personal care attendants for elderly, sick or disabled family members. In California, if you’re a real estate broker you have to provide workers’ compensation for all your agents, including independent contractors. Again, if you aren’t clear on what your state requires, find out.
What exactly does this insurance cover? Workers’ compensation insurance pays for the medical bills and lost income (as required by each state law) if a person in your employ is injured on the job, regardless of whose fault the injury was. Unfortunately, there are a whole lot of eventualities that workers’ compensation insurance doesn’t cover, like law suits because the employee feels his injury resulted from your negligence. For that you’ll need an additional employer’s liability policy. In today’s litigious society, it’s better to err on the side of caution to protect your assets in the event of a lawsuit. Even if your state doesn’t require someone in your particular situation to carry workers’ compensation, that doesn’t excuse you from liability if an employee is injured or killed.
How much does workers’ compensation insurance cost? Workers’ compensation is priced using information from the National Council on Compensation Insurance, Inc., the nation’s largest provider of workers compensation and employee injury data and stats. There are hundreds of codes covering workers’ comp and pricing will vary from state to state and depend on your situation. Premiums are calculated based on each $100 of payroll against the level of occupational risk. So a low-risk job like receptionist might be 50 cents per $100 of payroll, while a high-rise window washer or roofer might be over $20 per $100. Be sure to shop around for the right workers compensation insurance quote
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