Where and How to Get Workers' Comp Insurance

Workers' compensation insurance is an essential part of a complete business insurance policy. It can protect your employees and your business from the cost of work-related accidents leading to injuries, illnesses, disabilities, or fatalities. However, it can be helpful to understand where and how to get this coverage so your business can properly comply with state laws and regulations.

A local independent insurance agent can help you find the right workers' comp policy for your business. They'll help you understand how to buy workers' comp insurance and ensure you get matched to the amount of coverage your unique business needs. But first, here's a guide to getting workers' comp insurance the right way.

How to Get Workers' Comp Insurance

If you own a business, you may have been wondering, "How do I get workers' comp insurance?" First, understand that each state has its own specific laws and regulations for workers' comp requirements and how businesses must get coverage. Make sure to research the specific laws for the state in which your business is located.

In general, you have four choices of where to get workers' comp insurance:

1. From a private insurance company: A private workers' comp insurance company will offer workers' compensation policies for a rate they set. These policies come with various coverage exclusions you must be aware of before you try to file a claim. Not all private insurers may approve your business for coverage.
2. State-funded coverage: Many states offer workers' compensation coverage through a state fund. Since states compete with private insurance companies to offer this coverage, you may get a better rate. State-funded coverage can also be a great option if your business wasn't approved for coverage from a private insurer.
3. Monopolistic state-funded coverage: A handful of states require businesses to get workers' comp coverage through a state fund. These states include North Dakota, Ohio, Washington, and Wyoming. If you own a business in one of these states, you must get workers' comp through the state fund.
4. From an independent insurance agent: An independent insurance agent can help you find the best workers' comp insurance in your area. They can shop and compare policies from multiple workers' comp insurance companies for you. Independent agents provide a much more personalized experience than going through a private insurer or a state fund.

Business owners have a few options for buying workers' compensation coverage. The process of getting workers' comp insurance for a small business is largely the same as that for a larger business. If you're still asking, "Where can I buy workers' comp insurance?" ask a local independent insurance agent for help.

What Are the Main Things to Consider When Applying for Workers' Compensation Insurance?

As an employer, there are a few things you should keep in mind when shopping for workers' comp. After you become familiar with your state's workers' compensation laws, you'll need to have some information ready to provide an insurance company, state fund, or independent insurance agent to get matched to the right coverage:

• Your business's industry and operations
• Your business's locations
• The number of years you've been in business
• How many employees work for your business
• Your total annual payroll
• Your employee's job duties and exposures
• Your business's federal employer identification number

Presenting this information as accurately as possible is critical to ensure your business gets a policy with the appropriate amount of workers' compensation coverage. If your business is underinsured, you could end up facing state penalties for non-compliance, even if you intended to get the coverage required of you.

How Long Does It Take to Get Workers' Comp Insurance?

The amount of time it takes to get a workers' comp policy varies by your business's location and how you choose to get coverage. If you go through an independent insurance agent or a private insurance company, you could be matched to a policy within minutes. If you go through a state fund, how quickly your business obtains coverage will depend on your specific location.

Why Do Businesses Need to Get Workers' Comp Insurance?

Small business owners can benefit from having workers' comp insurance in several ways. Workers' comp can reimburse employees for expenses associated with a work-related injury or illness, including medical bills, prescription medications, rehabilitation costs, etc.

A workers' comp policy can also provide partial wage replacement for employees who have suffered a workplace injury or illness and need time off work to recover. Typically, workers' comp can replace up to two-thirds of a worker's standard pay. Workers' comp can also provide disability benefits and death benefits.

Workers' comp can protect a business from having to pay for an employee's medical expenses and also reduce the company's liability for covered incidents. If your business offers workers' comp, it's often exempt from lawsuits filed by employees or their family members for workplace accidents, even those resulting in death.

Since workers' comp is also often mandatory by state law, having coverage can help your business avoid state penalties like fines, jail sentences, or a forced suspension of operations.

When Can a Business Choose to Self-Insure?

Self-insurance for workers' compensation may also be an option for your business in a few cases. Those who are self-employed with no employees may choose to get a ghost workers' comp policy, which allows sole proprietors and LLC owners to have a certificate of insurance (COI) for workers' comp without paying the full policy premium. Having a COI can help your business make contracts with clients who would otherwise refuse to work with you.

A ghost policy requires a minimum premium in exchange for proof of insurance. However, these policies don't actually provide any coverage, and in fact, the business owner is exempt from coverage. Make sure you fully understand the risks involved in being self-insured before you decide to apply for a ghost policy.

How Can Self-Employed Workers Get Workers' Comp Insurance?

If you're an independent contractor, you might not be legally required to be a workers' comp policyholder. However, workers' comp can still offer you critical financial protection in case you get injured because of your job. Since private health insurance typically won't cover injuries or illnesses caused by job duties or the work environment, it's not often wise to skip workers' comp coverage entirely.

Self-employed individuals may also be required to have workers' comp in certain cases. If you have any employees, including subcontractors, your state might require you to have a policy. If you're unsure of whether you need workers' compensation by law, ask your local independent insurance agent.

How Much Does Workers' Comp Cost?

Workers' comp costs can vary based on many factors, including your business's industry, location, annual payroll, and number of employees. Additionally, the way your employees are classified according to their employment status (i.e., full-time or part-time) and their job duties affects your business's coverage premiums. To get an exact amount, you can contact an independent insurance agent, or for a less accurate estimate, use a workers' compensation cost calculator.

The National Council on Compensation Insurance (NCCI) assigns various class codes for many different types of workers in various industries. Be sure to look up the correct NCCI class codes for your employees when applying for workers' comp to get an accurate quote. Misclassifying your employees can also result in state penalties down the road.

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Here's How an Independent Insurance Agent Can Help

Whether you own an LLC, sole proprietorship, or any other type of business, an independent insurance agent in your town can help you get set up with the proper workers' compensation. These agents are familiar with the workers' comp requirements in your area, so they'll get you matched to the right amount of coverage with ease. 

They have access to multiple insurance companies and can shop and compare policies and rates for you. And later on, your agent can also help you file workers' comp claims and update your coverage as necessary.