For these reasons, workers’ compensation coverage is a sound business investment. It protects your employees, their loves ones, your business – and you – from the financial hardships and the legal repercussions that could come about in the unfortunate event that one of your workers is injured or becomes ill while on the job. It is a requirement in most states, and because of the several benefits that this insurance offers, it’s easy to see why.
Workers compensation insurance cover only work-related injury or illness including: lost wages, medical expenses, and other benefits to employees who may become injured or sick while they are working. It’s a sound business investment, as it protects your most important asset: your employees.
Most workers compensation classifications use remuneration or payroll as the exposure or rating basis to calculate premium. A few are rated based on a flat premium charge per-employee or per-capita, such as domestic workers. The primary reason to use remuneration assumes that employees in more hazardous jobs are paid more and, the more hours worked, the higher the pay.
The complete list is in the NCCI Basic Manual for Workers Compensation and Employers Liability Insurance. This abbreviated list gives just an idea of the many types and extent of remuneration and the fact that it may be more than just a paycheck.
Some types of remuneration are not included and are not used to calculate premium. Those include tips, employee awards, severance pay, military duty pay, food, lodging, uniform allowances, and similar expenses for company-sponsored travel.
Overtime pay is the most complicated issue involved in accurately determining remuneration because the increased per hour paid for that overtime cannot be used. The base per hour remuneration can be used but not that increased per hour rate. Incentive pay or shift differential pay that encourages employees to work unpopular shifts or days is not treated as overtime pay. When the employer maintains good payroll records that clearly indicate the amount of overtime, the remuneration used to calculate the premium does not include the additional or extra rate of pay for the overtime.
How much does Workers Compensation insurance cost? The cost of workers comp insurance varies tremendously, depending on your industry and location. If you are in an industry where work-related injuries are more likely to occur or in a state where insurance premiums are higher, then it will cost more.
For example, for a roofer, tree trimmer, or demolition company, the cost could be $17 per $100 in payroll, or even higher. On the other hand, the cost to cover a attorney, accountant or real estate agent could be under $0.20 per $100 of their payroll. So, for an employee that earns $40,000 a year, a blue collar contracting company could pay around $6800, where a white collar business may pay just $80.
Also your workers comp rates can go up or down depending on your accident history, much like they would for most types of insurance.