What is Workers’ Compensation Insurance?

25 May What is Workers’ Compensation Insurance?

Workers’ compensation insurance, also known as workers’ comp, is when employees injured on the job receive medical treatment and are compensated for lost wages associated with a direct work-related injury or illness.

Workers’ compensation insurance can protect your business and your employees by helping cover:

• Compensation for fatal injuries
• Medical expenses
• Missed wages during recovery
• Lawsuits related to work injuries

How is the cost of workers’ compensation insurance determined?

Not all workers’ comp costs are the same. The price you’ll pay for workers’ compensation insurance depends on several factors unique to your business, like payroll, industry, claims history, and state laws.

A formula you can use to help estimate your business’ workers’ comp cost is:

Workers’ Classification Rate X Experience Modification Factor X (Payroll / 100) = Premium.

Having more high-risk class code employees can result in a higher workers’ compensation cost. For example, according to Cerity:

• In California, the cost of workers comp for every $100 in payroll is 40 cents for low-risk workers (like clerical workers) and $33.57 for a high-risk labor job.
• In Florida, the average is 26 cents per $100 in payroll for a low-risk job and $19.40 for a high-risk job.
• In New York, the average is 7 cents per $100 payroll for low risk and $29.93 per $100 payroll for high risk.

Who is required to carry workers’ compensation insurance?

Generally, workers’ compensation coverage is mandatory for all employers who have one or more employees, whether part-time or full-time; however, requirements vary by state, by industry, and even by the size and structure of your business and payroll.

Certain businesses may also be exempt from their state’s workers’ compensation law. A few examples include:

• Part-time workers
• Volunteers
• Employees with family members
• Employees who work on commission

Failure to have workers’ compensation coverage could result in severe and costly repercussions. It is also essential to be best prepared for potential workplace accidents.

How do I get workers’ compensation insurance?

We exist to make workplaces safer. Contact Synergy Comp at 1-877-704-7060 and let us be your workers’ compensation solution.