2014

Workers' Compensation Insurance

Workers’ Compensation Insurance can protect an IT business’s most important asset: its employees.

When an employee is injured on the job, Workers’ Compensations Insurance (also called Workman’s Comp or Workers’ Comp) can help businesses cover medical costs and related expenses like lost wages. Often, this coverage is required by law.

If you have W2 employees, there’s a good chance you’ll need to have Workers’ Compensation to fulfill your state requirements. And some states may even require coverage for 1099 contractors.

Below we’ll help you navigate your Workers’ Comp requirements and give you an overview of how this coverage works.

What Is Workers’ Compensation Insurance?

Let’s start with the basics: why do businesses need Workers’ Comp?

Because state-level laws hold employers liable for medical bills if an employee suffers an on-the-job injury. When someone’s hurt, the boss has to cover their medical costs.

In addition, state laws usually require employers to have Workers’ Compensation Insurance to cover any liability they might have for causing or failing to prevent the injury or illness. When an employee is injured or made sick at work, Workers’ Comp benefits may be able to pay for…

  • Their medical costs.
  • Partial lost wages.
  • Ongoing care and rehabilitation.
  • Funeral expenses.
  • Death benefits.

Without Workers’ Compensation Insurance, a business may have to pay out of pocket for an employee injury. So if a worker develops carpal tunnel syndrome, you could be liable for surgery costs, rehab, and lost income. Those injury costs can add up. But Workers’ Comp usually covers $1 million worth of costs per occurrence.

What Does Workers’ Compensation Insurance Cover?

Workers’ Comp benefits can cover a whole range of work-related injuries, including…

  • Repetitive stress injuries.
  • Broken bones.
  • Back injuries.
  • Falls.
  • Allergic reactions.

Any time an employee is injured at work or while doing a work-related task, you could have a Workman’s Comp claim on your hands. That means that if an employee trips while running an errand to buy coffee for the office, you could be looking at an expensive medical bill.

Workers’ Comp Risks in a Tech Office

The words “Workers’ Compensation” may conjure images of construction site accidents and other traumatic physical injuries. But like many things in life, the reality is a little more boring. The second most common cause of workplace injuries is slip, trip, and fall injuries. Translation: an employee is more likely to be injured at work from a face plant than a power tool.

Even in a workplace where most of your work is digital, there are risks. An employee could strain their back carrying a box of printer paper. A programmer could developer a painful case of carpal tunnel. And any number of accidents could lead to emergency room visits.

Of course, that isn’t to say that working in IT is as risky as other industries. In fact, tech employers generally pay lower rates if their employees only do office jobs. Your Workers’ Comp premiums will be far less than those of a construction company.

How Much Does Workers’ Compensation Insurance Cost?

As with all small business insurance, Workers’ Compensation Insurance costs vary from company to company. With that said, it’s helpful to look at a few sample quotes to see what businesses like yours might pay for coverage.

The following cost estimates show how much three IT companies of difference sizes pay for a Workers’ Comp policy that gives them $1 million in coverage per incident.

  • Single IT contractor / web designer. $641 to $1,110 in annual premiums.
  • Small IT Company (0-2 staff, 0-5 programmers). $2,441 in annual premiums.
  • Large IT Company (6-10 staff, 10-50 tech employees).  $10,993 in annual premiums.

Does Workers’ Comp Insurance Cover Lawsuits?

That depends. If your Workers’ Comp policy includes Employer’s Liability Insurance, it can offer coverage for…

  • Lawyers’ bills
  • Court costs
  • Settlements
  • Judgments

…when an employee sues you over your liability related to their injury.

But not all policies include this coverage. And if you buy your policy from your state market, there’s a good chance it won’t. Monopolistic states (where you can only get Workers’ Comp from state-run programs), don’t offer lawsuit protection.

If you want Employer’s Liability Insurance, be sure to check with your insurance agent to see if you’re covered.

Workers’ Comp State Laws

Employers who have W-2 employees will most likely need to have Workers’ Compensation Insurance. All states (except Texas) require it. But state laws vary, so you should always check your specific laws.

Select your state for information about your Workers’ Compensation Insurance where you live.

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What Are Workers’ Comp Class Codes?

When you sign up for Workers’ Compensation Insurance, your agent will list the number of employees you have and assign a “class code” to each. That sounds more complicated than it is.

Workers’ Comp codes classify employees by their responsibilities. Clerical employees fit under one code (8810), while soy bean farmers fall under another (111110). These codes actually help you.

Less physically demanding jobs have lower Workers’ Comp rates. By getting the right codes for your employees, you can make sure that you’re paying the right premium for them. And that means you’re not overpaying.

Workers’ Comp Related Resources