Regardless of the size of your business, the following is a partial list of coverages which should be considered when protecting your operation. Benchmark Commercial Insurance Services, Inc. specializes in providing custom tailored packages of these coverages for you.
Workers Compensation insurance pays benefits to your employees if they are injured while on the job. Specifically, it covers their medical bills, a portion of lost wages, vocational rehabilitation and death benefits. Almost every state requires by law that employers carry some form of workers’ compensation insurance. Because the coverage amount is established by state law, benefits do not vary from company to company within the same state.
What does workers’ compensation cover?
Benefits paid to employees generally include:
Unlimited reimbursement of medical expenses
A portion of lost wages
Some vocational rehabilitation
A survivors death benefits paid to the employer generally include:
Responses to lawsuits brought by injured employees or their dependents for grossly negligent acts by the employer
Protection against employee claims for pain and suffering and loss of relationship (except in North Dakota, Nevada, Washington, West Virginia, Wyoming and Ohio)
Who does workers’ compensation cover?
Workers’ compensation covers all the employees of the small business. Special provisions must be made if employees work out-of-state. It can cover the business owner if the business is a corporation, and the owner is actively involved in the business. It does not cover independent contractors.
Officer/Partner Information according to CA Labor Code:
Sole Proprietors are not included for coverage.
Officers of Private, For Profit Corporations may be excluded from coverage only if:
1. 100% of corporate stock is held by the corporate officers/directors and
2. excluded officer owns stock
Partners – Only general partners may be excluded from coverage. Limited partners may not be excluded.
Officers of Public Corporations may not be excluded.
Officers/Directors who receive compensation are considered employees. They are included for coverage and may not be excluded. Their payroll should be included and is not subject to a minimum or a maximum.
Officers/Directors who DO NOT receive compensation are considered volunteers and are not covered. No payroll should be included for these volunteers. Some companies will include Volunteers, ask your agent.
What affects my rates?
Size of payroll
Workers’ compensation premiums are based directly on the amount of your payroll. The higher your payroll, the more in workers’ compensation premiums you will pay!
The cost of workers’ compensation insurance also varies widely depending on the work function of an employee. In general, a premium for an employee who is a roofer is much higher than a premium for a clerical worker. Employers must accurately report payroll by classification of work performed. Your insurance company can advise you which classes apply to your employees.
The employment arena has become complicated and litigious. The number of employment-related lawsuits has increased, and award levels are setting records. USA Today recently estimated that there are more than 150,000 wrongful employment practices complaints currently filed at state agencies and the Equal Employment Opportunity Commission (EEOC). The average damage award employers must pay in employment-related lawsuits is $650,000.
Unprecedented liability for fiduciaries that manage employee benefit plans was created with the passage of the federal Employee Retirement Income Security Act of 1974 (ERISA). To protect the interests of plan participants and their beneficiaries, ERISA defines the liabilities and responsibilities associated with the management and administration of an employer's health and welfare, pension, profit sharing and other employee benefit plans.
Enactment of ERISA was only the first step in pension reform. Since its passage, a number of additional laws have supplemented ERISA to further protect the innocent and penalize the guilty For example, the Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Retirement Protection Act of 1994 create additional compliance obligations for fiduciaries. Furthermore, the increase in employee stock ownership plans (ESOPs) creates significant liability for fiduciaries.
In recent years, corporate America has witnessed an increase in the number of claims alleging ERISA violations and the costs associated with these claims. The average indemnity payment has increased over 22 percent, from $715,000 to $875,0001, and the average defense expense has gone up 471 percent, from $70,000 to $400,000.
While insurance may protect the financial assets of a company and its fiduciaries from claims, an effective loss prevention program can reduce the potential for those claims.