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Workers' Compensation Insurance
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Frequently asked questions about workers’ compensation insurance

Most states require workers' compensation for small businesses that have employees. Learn what this policy covers, when it's required, and other answers to frequently asked questions.

Workers' compensation insurance coverage and requirements

Does my business need workers’ compensation insurance?

Almost every state requires small businesses to purchase workers' compensation insurance as soon as they hire their first employee. In fact, Texas and South Dakota are the only states where it is not mandatory for employers to purchase this policy.

Even if workers’ comp isn’t required, the owner of a small company may decide to purchase coverage to avoid costly medical bills and/or legal expenses from an employee work injury.

Check your state laws and requirements for more details.

What does workers’ compensation cover?

Workers’ compensation helps cover costs when an employee at your small business suffers a work-related injury or illness. It can help pay for:

  • Emergency medical bills
  • Ongoing medical treatment, such as physical rehabilitation
  • Part of the wages lost while the employee is recovering

Most workers’ comp policies include employer’s liability insurance, which can cover a business’s legal costs if the employee blames their injury or illness on the employer’s negligence.

Unlike most policies, there’s no limit to how much workers' comp will pay on a claim, unless it’s an employer’s liability claim.

I’m an independent contractor or sole proprietor. Do I still need this policy?

Independent contractors and sole proprietors with no employees are generally not required to carry workers' comp insurance. There are two scenarios when an independent contractor or sole proprietor would need this policy:

  • A client contract demands you carry it
  • State laws require it

You should consider buying workers' comp coverage even if it's not required. Your health insurance might not cover injuries that are related to work, which would leave you responsible for medical bills. On top of that, you would miss out on wage replacement benefits that can help keep your business running while you recover.

Independent contractors, sole proprietors, and other exempt business owners might be eligible for a type of minimum premium policy called a workers' comp ghost policy. It can help self-employed individuals provide a certificate of insurance (COI) without having to pay for a full workers’ compensation policy.

Do limited liability companies (LLCs) need workers’ compensation coverage?

If your limited liability company (LLC) has even one employee, it will need to carry workers’ compensation insurance.

If your LLC doesn’t have any employees, your need for coverage depends on how many executive officers or members you have and other factors related to your company.

Why is worker classification important?

The type of work your employees do impacts the cost of your workers’ compensation policy. Each employee must be assigned a workers’ compensation class code that best reflects their work environment and their risk level. The higher the risk level among your employees, the more expensive your workers' comp will be.

To avoid lawsuits and penalties, be sure to classify all your employees correctly.

Find workers' compensation insurance quotes for your small business

Workers' compensation insurance cost information

How much does a workers’ compensation policy cost?

The average cost of a workers' compensation policy is $45 per month. However, you could pay more or less depending on liabilities specific to your small business.

To calculate an insurance premium, your insurance provider will consider several factors, including:

  • Your business type
  • Number of employees you have
  • How much insurance coverage you need
  • Your location
  • Industry and risk factors
  • Payroll
  • Coverage limits
  • Your claims history

How can I save money on workers' compensation insurance?

With TechInsurance, you can compare quotes from top-rated insurance providers. This offers you an easy way to save money on workers' comp insurance.

Beyond comparison shopping, you can also save money on insurance by:

  • Classifying your business and employees correctly
  • Managing risks to avoid claims
  • Choosing a high deductible
  • Creating a safe workplace
  • Communicating transparently with your employees

Learn more ways to save money on workers' compensation insurance.

Buy workers' compensation insurance with TechInsurance

Does TechInsurance cover my industry?

TechInsurance is a trusted insurance expert for all small businesses, including startups and freelancers, with extensive knowledge of the technology sector.

Technology professions that commonly partner with TechInsurance for their insurance needs include:

How quickly can I get insurance coverage with TechInsurance?

It takes just a few minutes to complete our online workers' compensation insurance application. In most cases, we’ll show you quotes as soon as you finish the application. A licensed TechInsurance insurance agent can talk through your options with you before selecting the policy of your choice.

Once you purchase a policy, we’ll email you an workers' compensation certificate of insurance. The certificate of insurance is the formal proof of insurance you need to show when you apply for professional licenses or sign certain contracts.

What information do I need to fill out an insurance application?

Our workers' compensation application requires basic information about your business, such as its location, number of employees, and estimated revenue. When you finish the application, you'll receive quotes from our network of top-rated insurance companies.

From there, you can look them over and pick the one that works best for you. If you need help, one of our licensed insurance agents is happy to assist you.

How do I obtain a certificate of insurance?

Once you’ve paid for your workers' comp policy, there are two ways to obtain an ACORD certificate of liability insurance with TechInsurance:

This form is the proof of insurance required by commercial leases, client contracts, and applications for certain professional licenses.

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Workers’ compensation claim and settlement process

What should I do when an employee is injured at work?

When an employee is injured at work, your first responsibility is ensuring the safety of your workers. Your immediate response should be to assist the injured, get workers to a safe area, and contact emergency medical services if anything more than basic first-aid is needed. When the situation is under control, talk to witnesses and take notes to document what happened.

How do I file a workers’ compensation insurance claim?

When you or one of your employees is injured, you must:

  • Give the employee the appropriate paperwork and guidance
  • File the claim with the insurer
  • Comply with state law for reporting work injuries

To make a workers' compensation claim, the employee must report the injury within a certain time frame, which varies depending on your state. The employer should provide the employee with appropriate paperwork, including a claims form, and submit it to the insurance carrier.

In some states, incidents must be reported to the state workers’ comp board. The employee may also need to seek medical treatment from a doctor approved by the board. Your agent can guide you through the process and provide answers to any additional questions.

How do workers’ compensation settlements work?

If the injured employee is not satisfied with the insurance company’s offer on a claim, the employee can pursue a settlement with the help of an attorney. The employee, the attorney, and the insurance company will negotiate to find an amount that satisfies all parties. The employer should stay involved and informed to reduce the chance of a lawsuit.

Workers’ compensation policy changes

Can I increase the limit on my current policy?

To change the coverage limit of your workers' compensation policy, simply contact your TechInsurance agent at any time to see all your options.

Your agent can adjust the policy limit to give you more or less coverage. We can also help if you need to purchase other insurance policies for your business.

What happens if I cancel my policy?

If you cancel your workers' compensation insurance policy before it expires, you run the risk of paying more for the same policy later. Insurance companies typically charge higher rates to businesses that cancel policies.

You also leave your business exposed to potential risk if you cancel your coverage. Because workers’ comp is often required by state law, you could face fines or even jail time depending on the laws in your state.

Read more about what you should consider before canceling a policy.

Compare workers' compensation insurance with other policies

General liability insurance vs. workers' compensation insurance

Commercial general liability insurance pays for costs associated with third-party risks, such as client bodily injury, property damage, and copyright infringement.

A general liability policy does not cover employee injuries, which is where workers' compensation insurance comes in. This policy covers the costs associated with employee injuries and even pays for lost wages during recovery periods.

Depending on which state your business is located in, you may be legally required to purchase workers’ comp coverage.