What is Workers Compensation Insurance?
Have you recently opened a business? Do you have an established business but are unsure whether or not you need to carry workers compensation insurance? If so, it is essential to understand this important Santa Clarita business insurance coverage. Workers Compensation Explained Workers compensation insurance covers medical costs, rehabilitation costs, and any permanent disability for employees if they are injured while on the job. This insurance will also cover an injured employees’ wages until they are ready to return to work. Finally, the coverage pays on your behalf as the business owner to a third party if additional care is needed, there is a loss of services, or there is bodily injury to a spouse (e.g. loss of consortium).
Why Your Small Business Needs this Coverage
In California, the law requires that every business with at least one employee, no matter the industry, must carry workers compensation insurance. In addition to protecting yourself and your employees, you can face stiff penalties if you do not carry this type of insurance.
Why You Should Purchase Workers Compensation Insurance
Once you hire even one employee, the state requires that you purchase workers compensation insurance. If you do not have this coverage, and an employee is injured while on the job, you can be held personally responsible for all costs associated with that injury. This is true whether you are incorporated or operating as a sole proprietor. Between medical bills, rehabilitation costs, lost wages, and other potential liability, even a well-established business can be financially ruined without the proper coverage.
Is Workers Compensation Insurance Expensive?
California law mandates a minimum amount of $1,000,000 for workers compensation coverage. Rates are calculated based on your estimated payroll by risk classification. Most rates are expressed as a cost per $100 of payroll. For example, if you have an employee who works solely in an office, their workers compensation rate would be low (under $1 per $100 of payroll). However, an auto mechanic has a higher likelihood of being injured. They may have a rate of $5 per $100 of payroll. Your costs will depend on how much payroll you have for each risk classification.
Another factor is whether you have an Experience Modifier. Companies that have been in business for 3 year or longer and meet certain premium thresholds may have an Experience Modifier. Simply put, this compares you to other similar businesses. If you have had more claims or higher cost claims than the average similar businesses, you will pay a surcharged rate. If you have fewer or lower cost claims than the average, you will pay a discounted rate. Depending on what safety programs you have implemented, you may also have an opportunity to lower your premiums further. This is an area to discuss with your broker. If you need to purchase workers compensation insurance for your business, contact JSG Insurance Services in Santa Clarita today. We can find you great coverage at a great price so that you can rest easy knowing your business is in the right hands in case of an accident.
JSG Insurance Services
27433 Tourney Rd, Suite 280
Santa Clarita, CA 91355