Workers’ compensation insurance, coupled with an active and vigilant work safety program, helps business owners control their cost of insurance and keeps their employees safe.
Workers’ Compensation Definition
So, what exactly is workers’ compensation? Sometimes called “workers’ comp” or “work comp,” it provides wage replacement and medical benefits to employees for work-related accidental injuries and diseases. If an eligible employee is injured on the job, workers’ compensation will cover his or her medical costs and wages during the recovery period.
How are Workers’ Compensation Premiums Calculated?
Premiums are calculated with a simple formula:
Payroll x Classification Rate x Experience Modification Factor = Premium
Insurance companies assign every employee a workers’ compensation class code defined by job role and duties. Each of these classes has its own rate. Think about it: If you were to compare a coal miner and an office worker, which employee do you think would have the higher rate? Which job is more dangerous? The office worker could be at risk of slipping and falling. But the coal miner works in extremely dangerous situations every day. Therefore, the class code rate for a coal miner would be much higher than an office worker.
The Experience Modification Factor is an indication of how safe or unsafe an organization has worked over the last three years. A 1.00 E-Mod is considered average. Anything below that is better than average. Anything above 1.00 is worse than average. A company’s E-Mod is calculated every year based on three years of claims history, not including the most recent policy period.
What is the claims process like?
If an employee get injured during the scope of his duties, the business owner should report the claim promptly so an investigation can take place. The insurance company should examine the claim and work with the employee to ensure the injury is properly treated. They should also negotiate with lawyers if the situation escalates and settle the workers’ compensation claim. Ultimately, the insurance company should walk alongside the business throughout the entire process.
How do you buy workers’ compensation insurance?
Working with an independent agent is the best way to buy workers’ comp insurance. Independent insurance agents are experts at buying insurance. They can help you find affordable and the best coverage for you.
