Workers’ Compensation 101
In 1911, individual U.S. states began implementing laws requiring businesses to carry workers’ compensation insurance. Today, with limited exceptions, businesses are required to provide workers’ compensation benefits to employees. Failure to meet your state workers’ compensation system requirements can potentially lead to severe regulatory penalties. It’s a good idea to have workers’ compensation insurance to provide protection for both your employees and your business in the event of a workplace accident. Premiums can vary from business to business. Four factors that can influence premiums include:
- Payroll – Premium is partly based on an employer’s reportable payroll for services of individuals who could receive workers’ compensation benefits.
- Location – Because benefits owed and losses experienced vary by jurisdiction, premium rates can also vary by jurisdiction.
- Classification – Employers are placed in rate classifications with other companies that have similar operations and risk exposures.
- Experience Rating – When available, experience rating is used to recognize the differences among individual insureds with respect to frequency and severity of claims.
When a business establishes a safe work environment, workers are less likely to experience injuries or illnesses that may cause workers’ compensation claims. For more more helpful information, download our workers’ compensation 101 infographic below.