Chapter 7 - Business Insurance
The Laws Concerning Workman's Comp
Workman's Comp is a set of laws to help protect injured workers.
 These laws provide medical care and wage benefits in the case of a work related injury.
Since it is required by law in most states and for most employees, as a business owner, you will need to understand what it is and how to get it.
Workman's Comp & State Regulated and Required
Workman's compensation, also known as workman's comp, is a state regulated insurance.
It covers an injured employee regardless of fault. This means that even if your employee was careless, they will receive workman's comp for their injuries.
Every state has different rules concerning workman's comp on but most states have some form or coverage.
Workman's comp keeps an employee from suing your company for on-the-job injuries.
For this protection, you must provide for their medical bills and coverage.
Although most businesses must carry workman's comp, some sectors of business are exempt. Depending on the state, these may include:
- Agriculture employees
- Independent real estate agents
- Employers with a small annual payroll, i.e. less than $20,000 in Kansas
- Employees with a small number of employees, i.e., less than six in Maine
- Self-employed individuals Injuries and Illness That Count
If an injury happens on the job, it is a workman's comp issue. If an illness is caused from performing a job, it is also a workman's comp issue.
These illnesses or injuries can be caused by a single event such as a fall from a roof, or over a long exposure, such as the need for knee replacement from continual bending and stooping.
As an employer, you do have the right to dispute a claim. For instance, if an employee got hurt but it was not accidental, you may not be required to pay.
 Also, you may be able to avoid a claim if your employee was negligent. This, however, is very difficult to prove.
What's the Cost?
The initial insurance premiums will be based on the typical claims that are likely to occur in your industry.
Businesses with less chance of injury, like office workers, have lower premiums than those, like construction, that have higher risks.
After a period of time set by your state, your rates will be based on your actual claims.
You will have higher premiums for higher than average claims and lower premiums for lower than average claims.
Not Every State is Created Equally
Not all states have the same rule and regulations concerning workman's compensation. Here is a list of how different states handle it:
- North Dakota, Ohio, Washington, West Virginia, and Wyoming: The state sets rates and operates a state administered fund of workers compensation insurance.
- California, Delaware, D.C., Indiana, Massachusetts, Michigan, Minnesota, New Jersey, New York, North Carolina, Wisconsin, West Virginia: These states allow private insurers to provide workers compensation subject to ratings and administration developed by that particular state.
- Texas: Allows some employers to have no insurance.
- All other states not listed: Allow private insurance and are rated by the National Council on Compensation Insurance (NCCI). These states are referred to as "NCCI" states.
To learn more about this coverage and your state regulations, you should consult with the insurance agent that handles the rest of your insurance.
What's Next
Next In This Guide
 What You Need to Know About Unemployment Insurance - In addition to helping workers and their families, the Unemployment Insurance programs play a key role in helping businesses, communities, and the nation's economy.
Previous In This guide
 Commercial Auto Insurance And Your Business - Commercial auto insurance helps protect your business from unexpected medical costs and auto repair costs caused by a collision.
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