Worker’s Compensation

Protects the insured and employees for injuries and potential lawsuits arising from workplace hazards.

Worker’s Compensation insurance provides medical & wage benefits and rehabilitation costs to employees who are injured or become ill during the course of employment, as well as death benefits to the family members of an employee who is killed on the job.  Most states, with the exception of Texas, require companies who have employees to carry Work Comp insurance.

Worker’s Comp insurance is the sole remedy for workplace injuries & illnesses, meaning the employer is protected from civil suits from their employees if the worker is injured performing their job duties. Most Work Comp policies are broken into two parts: Part one outlines medical benefits which are prescribed by the work comp law of the state employer is located, and part two provides employer liability coverage. Most states allow a competitive marketplace for worker’s comp insurance.  However, monopolistic states such as North Dakota, Ohio, Washington, and Wyoming require the employer to purchase insurance through their state programs.

Pricing of Work Comp policies is based on a classification system.  Depending on the job duties of each employee, their payroll is classified under a 4 digit class code and a rate per $100 in annual payroll is used to estimate the cost of the policy.  For example, Tony’s Tile hires a full time employee to help Tony on installation jobs.  The class code for Tile/Stone Installation is 5348 and the rate is $4.80.  For every $100 Tony pays the new employee, he can expect to pay $4.80 in worker’s comp insurance premium.

Other factors can influence the pricing of your policy, for better or worse.  Your company’s Experience Modifier (X-Mod, EMOD, or EMR depending on the state) factors in the specific loss history for your company.  Good loss history = discounts, bad loss history = surcharges.  Location, years of previous work comp insurance coverage, and safety protocols can also affect what you pay in work comp premium.

How Much Does It Cost?

Since Worker’s Compensation insurance covers injuries to your employees, the amount of annual employee payroll is the biggest factor to determining the price of a policy.  However, there are a few other factors that affect the amount your policy will cost.

Pricing Factors:

  • Annual Employee Payroll
  • Class Codes / Duties of Employees
  • Location
  • Loss History & X-Modifier
  • Prior Years of Coverage
  • Company Safety Procedures

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F.A.Q.

If you have a question about Worker’s Compensation insurance you don’t see answered here, please use the Contact Us box below.   We’ll get right back to you!

What is Work Comp Insurance?

Worker’s Compensation insurance provides medical, wage, and rehabilitation benefits to employees who are injured or become ill on the job.  It also provides employer liability coverage which works in conjunction with the laws of the state to prevent employees from suing their employers for work-related injuries.

Why do I need it?

With the exception of Texas, most companies who have employees are required by law to carry Worker’s Compensation insurance.  Working without it leaves the employer vulnerable to not only fines & penalties from the state, but also lawsuits from their employees.  When it comes to construction & contracting work, an active policy is a standard requirement in almost all construction contracts.  In fact, GC’s and prime contractors are increasingly requiring a work comp policy whether the subcontractor has employees or not.

What does it cover?

State law determines what benefits work comp insurance provides to employees and while the benefits each state offers is fairly consistent, the amounts they provide can vary considerably. 

  • Medical Coverage – expenses for doctor, hospital, and nursing care as well as medications, diagnostic tests, physical therapy & medical equipment.
  • Disability – replacement of wages lost due to a disability.
  • Rehabilitation – vocational training for a worker who must change occupations due to an injury.
  • Death – benefits paid to the spouse and family of an employee who is killed on the job.
What is NOT covered?

Because it is state law that determines coverages and amounts, one must refer to their respective state legislature for the specific coverages.  However, work comp insurance does not cover things like wages for a replacement employee, OSHA penalties, injuries occurring to and from work, injuries caused by employee horseplay, intoxication, or substance abuse, heart attacks, or injuries occurring when an employee’s conduct violates company policy.

How fast can I get it and what do you need from me?

A Worker’s Compensation insurance policy can quoted and issued usually within a day or two as long as the applicant has all the necessary information ready.  If the applicant does not have this information ready then the time-frame from quote to issue can take significantly longer.  Necessary information required to provide a quote is:

  • Company Info (FEIN or SSN of the company, owner names & ownership percentages, address, phone #, email)
  • # of employees and their job titles/duties
  • Estimated annual payroll projections per job title/duties
  • Loss runs (5 most recent policy periods loss runs are preferred.  New in business companies, those hiring employees for the first time, or companies with lapses in coverage are still acceptable)

Related Articles

Workers Comp 101

Workers compensation insurance explained in basic terms.  Find out what it covers, why you need it, and how to save money on it.

Why You're Paying Too Much For Insurance

Sure, factors like trade, experience, revenue, and payroll affect how much you pay for insurance.  But there is another factor that contributes to why Builder’s Shield is able to save their contractors an average of 18% on their policies.

What is an Xmod?

It is the most important number when it comes to how much you pay for workers compensation insurance.  Find out what it means, how it is calculated, and how it can save you money.

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