As a small business owner, once you start hiring employees to work for you, you will need to change the way you structure your business and the type of insurance policies you carry. One of the insurance policies you will need to start carrying is a worker's compensation insurance policy. Here are a few things you need to know when shopping for worker's compensation.
Start with State Requirements
The first thing you need to do is educate yourself on your state's insurance requirements. Workers' compensation is something that is regulated at the state level, which is why you need to understand your state's requirements.
To start with, you need to ensure that your policy complies with all the states where your employees perform work, so if you have remote workers or your workers travel and do work for you in other states, you need a policy that works in the state you are based in and the states where they do work. In that case, you will need to get multi-state coverage.
Workers' compensation is only designed to cover injuries that employees get while on the job. This doesn't cover injuries to customers or visitors; that is what your general liability policy is for.
Need to Classify Your Employees
For worker's compensation purposes, you will need to classify your employees based on the work they do for you. This isn't something you have to create on your own; insurance companies have a numerical classification system based on what the employees do for you. That code helps determine the risk that comes with providing insurance for that employee.
For example, an administrative assistant at a construction company will have a lower degree of risk than a worker who primarily installs roof. That is what the code is for. You can make assigning people to the right code easier by clearly defining and knowing what each employee does for you, making it easier for the underwriter to classify your employees.
Always Ask About Discounts
Workers' compensation is not cheap, which is why you are going to want to ask about discounts that you may qualify for. There is a wide range of discounts that you may qualify for, ranging from discounts based on the payment plan you select to payroll reporting discounts. It is always a good idea to check with your insurance agent to see what plans you may qualify for and earn a discount for.
If you are a small business and you are starting to hire employees to work for you, you need to work with an insurance agent and obtain workers' compensation coverage for your business and your employees. Start by understanding what is required of you in your state for this type of coverage. Then, classify and define what your employees do so that the underwriter can create an accurate quote for you. Don't forget to ask about discounts; there are always ways to save money.