If you need to purchase worker's compensation for your business for the first time, here are a few tips that you should keep in mind.
#1 Find Out About All State Specific Requirements
Workers compensation rules vary from one state to the next, which is why you need to contact your state and talk to a representative to learn exactly how much and what type of worker's compensation coverage you need to carry. The amount of coverage that you need to carry can vary greatly based on how many employees you have and what type of work they do. You always want to run any coverage you are interested in purchasing past the regulatory body in your state to ensure that it meets their requirements before you sign up for the insurance.
#2 Understand The Terms That Determine Your Premium
Second, it is important to understand how your premium will be calculated for worker's compensation purposes. Your policy will run for a year. During that year, the factors that the insurance company will take into consideration is the overall payroll amount that you pay each much, the formal state classification of the type of workers that you hire and use for your business, a rate per 100 that is based on the classification of your employees and an audit at the end of the policy terms of your books. Essentially, it is all about how much you pay in payroll and how your employers are classified.
#3 Make Sure Your Employees Are Classified Correctly
If you are just starting your business, you may want to hire a business attorney to review all of your job descriptions and employee classifications. A business attorney can let you know if there is extra information you need to include in your employee job descriptions or information you should take out. They can also review the classifications of your employees and make sure that everyone is correctly classified. Correct classification is essential to ensuring that you pay a fair rate for your worker's compensation coverage and is also important for tax purposes.
When purchasing worker's compensation coverage for your new business, work with your state governing agency on this issue, a business attorney and a qualified worker's compensation insurance agent to ensure that you follow all rules and laws and have everything set up correctly. Finally, have an attorney review your compensation plan to make sure that you have everything properly covered.