Worker's Comp Coverage: What You Should Know

It is every employer and business owner’s worst nightmare to have an employee injured on the job. Unfortunately, it's a scenario that is all too common and happens much more often than you likely assume. In fact, according to the Bureau of Labor Statistics, there are 3.4 Workers comp claims filed for every 100 full-time employees. The commonality of filing workers' comp claims is especially true in industries like construction or other labor-intensive work.

Is Workers Comp Required in Every State?

While workers' comp is required by law in some states, even if it isn’t in your state, it should always be a consideration due to its importance. Workers' comp isn’t always mandated but in the state of Missouri, it is legally required. You must carry workers’ compensation if you employ more than five employees if your business is in the state of Missouri. Furthermore, if you are in the construction industry, you must carry workers’ comp insurance if you have one or more employees, according to the Missouri Department of Labor. 

What is Workers Comp Coverage?

Workers comp coverage is a type of protection or insurance you provide your employees. It covers your employees in the event they become sick or injured while on the job. It can even replace wages lost from time away. You do not have to provide this coverage to independent contractors, only employees.

How Much Does Workers Comp Cost?

The cost of this coverage depends greatly on the state you live in as well as other factors, some of which are listed below:

  • Your Industry: Physically demanding work will often result in higher premium rates. High-risk industries therefore will tend to pay more than other industries to cover their employees with workers' comp. This is simply because the risk of having to pull from that coverage is greater. For example, around 20% of all worker fatalities within the private sector occur in construction. Therefore, this industry would have higher rates when compared to say a less risky field like finance and accounting. 

  • Your Annual Total Payroll: The amount of your total payroll will usually coincide with the size of your business. For example, the larger your annual payroll, the larger your business, and the more employees you must cover. This means that you will pay more in workers comp premium costs simply because as you gain employees, growing your business, the likelihood that one of those employees will need to draw on workers comp goes up. 

  • Your Claims History: If you have a history of filing workers’ comp claims through your business, then your cost will likely be more than another business even in a similar field. This is simply because you have shown the propensity to need compensation from your policy. The good news is that the more time passes after you have issued a claim, the lower your rate will go, so it will eventually come back down if your workplace remains safe.

Consequences of Not Having Workers Comp Coverage

If you lack workers’ comp insurance, an employee who is injured on the job can sue you for damages. Legal expenses are guaranteed to be high, so it is actually more cost-effective to purchase a WD policy to begin with, especially if you have a labor-focused business that provides services with a high safety risk.

How to Obtain Workers Comp Insurance

Workers’ compensation insurance must be purchased as a separate policy from an insurer. It can’t be purchased as part of a business owner’s liability insurance policy.

Arnold Insurance Can Help

A good way to manage your coverage expenses is to find a provider that has a “pay-as-you-go” billing solution, so you can pay your premium after each payroll instead of making large up-front payments and then reconciling at the end of the year. Contact our team today to see how our worker's comp coverage can provide this service and more to your business.


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