As a business owner or manager, you have a lot to keep track of. Sometimes navigating the regulations and rules for your industry can get challenging. One area that many business owners have questions about is concerning Worker’s Compensation coverages. Worker’s Compensation is meant to provide protection for both the business owner and for the employee and is among the most important coverages that you can have in Commercial Insurance. More importantly, in the state of Virginia, business owners are required by law to carry Worker’s Compensation coverage for their employees. Failure to comply with these laws can create a hefty financial mess for a business owner. According to the Virginia Worker’s Compensation Commission, employers can be, “assessed a civil penalty of up to $250 for each day uninsured, subject to a maximum penalty of $50,000…..Such employer shall also be liable to any employee for compensation for their injuries”.
Some larger companies hire consultants to stay on top of business regulations and avoid expensive mistakes. However, most small to medium range businesses just need an expert to give an overview and help them stay in compliance, not an on-staff consultant. That’s where the Choice Insurance Agency can help!
Check out these “Top Three Questions on Worker’s Compensation Coverage.”
1-) How does Worker’s Compensation work? How does it protect Employers and Employees?
Worker’s Compensation (WC) coverage helps to protect the employer from liability and helps protect the employee by providing coverage protection for physical injury caused in the course of carrying out their job. Another layer of protection for the employer is that the when the employee accepts the worker’s compensation coverage, they are generally waiving their right to sue for the incident that caused the accident. If the employee chooses to sue instead then the employer may be covered for the civil lawsuit or settlement. WC also provides protection for the employee by offering several benefits including: compensation while they are unable to work, coverage of medical bills to include prescriptions and surgery when needed. The standards created by these Worker’s compensation laws also can business owners get their employees back to work sooner through modified back to work programs and allows the employee to continue working at a modified capacity as to not lose out on income.
2-) When do I have to carry Worker’s Compensation for my business? Are there exceptions?
According the to the Virginia Worker’s Compensation Commission, “Virginia law requires that an employer who regularly employs more than two part-time or full-time employees carry Virginia workers’ compensation coverage”. According to these regulations, WC coverage must be provided whether the employees are part time, full time, a member of the family, a seasonal employee, someone working for a non-profit or charity, or a minor working for your company. There are no exceptions for sole proprietorship in the state of VA. Also, if your company utilizes sub-contractors to complete a service or job or out-sources labor, those workers must also carry WC coverage. It is essential that, as a business owner, you request proof of WC coverage for all sub-contractors that do work for your company and that you hold these certificates in your files in case you get audited. If your sub-contracted employees do not have coverage and your company is selected for an audit, fines or coverage expenses for these sub-contractors could fall on your since you employed them. Also, even if you are the sole employee of a company that you own, if you branch out into sub-contract work or take jobs for large companies, you may be required to carry WC coverage for yourself.
3-) How are premiums determined for Worker’s compensation? Is it really expensive?
Worker’s Compensation coverage is primarily determined by two main categories: type of job roles and amount of payroll. For instance, if the majority of your employees are engaged in office related duties, the risk level of your business is much lower than the risk level of a company that provides a tree removal service. Therefore, typically, the costs to protect an office related company is lower than a tree removal company because the risk of injury is statistically less for the office environment.
The second main contributor to WC premiums is the payroll. Insurance companies will typically do an audit of your payroll and employee job classifications to make sure that you are being rated correctly. While some employers dread this audit, the informed business owners see this as an opportunity to check for mistakes and ensure that all employees are being coded correctly. For example, during the audit, be sure to check that your employees are coded to the correct jobs that they do. In the interest of saving time, some insurance companies will code all of your staff as holding the same position. This incorrect coding can cost your business tons of money and make your premiums sky-rocket. In the example of the tree removal company, say there are 10 employees. Do all 10 employees hold the same position? Are they all climbing trees and operating machinery? A good insurance professional will ask these questions. In this example, the tree removal company may have one employee doing accounting and billing in the office, one admin employee, four outside sales reps and only four employees actually doing the tree cutting. My adjusting the job risks to specify the roles fulfilled by each employee, the tree removal company’s WC premium can be drastically decreased.
For a free consultation on your Worker’s Compensation, give the CHOICE Insurance Agency a call today at 757-416-5100. Our experienced Commercial Specialists will be happy to review your existing Worker’s Compensation coverage, answer your questions and help explore options to lower your rate. Give us a call today or request a call at a time that fits your schedule here.
All The Best,
The CHOICE Team
_________________________________________________________________________________________________________________________________ In 2008 Choice Insurance Agency was created out of the former Realty Consultants Insurance Agency founded in 1980 by George Ayers Capt. USN Ret. Since 2008 the Choice Insurance Agency has more than tripled in size and is continue on a track of rapid growth. The Choice Insurance Agency focuses on four areas of expertise: Private Client Group, Coastal Coverage, Senior Programs and Commercial/Business Insurance. Our business model has allowed us to expand into all of the states on the Eastern Seaboard from New York to Florida including Pennsylvania and DC to better serve our ever-growing client base. As an Insurance brokerage stationed in Hampton Roads with access to well over 40+ insurance carriers, the Choice Insurance Agency is able to shop for the best rates, cover those picky coastal zones and create a tailored plan to fit your insurance needs. The Choice Insurance Agency. Call us today and see why we are the top “CHOICE” in Hampton Roads.