Charmaine: So, we’re sitting here with Marc Rovner of Rovner & Company for this week’s edition of TELL-ALL TUESDAYS and this week we’re going to be covering Workers’ Comp Insurance questions. How are you, Marc?
Marc: I’m great, how are you?
Charmaine: I’m great, thank you. So, first, what is workers’ comp insurance?
Marc: Workers’ comp insurance is a protection that an employer provides for their employees in the event they were to get hurt on the job. The concept is that if an employer is employing people then they are potentially putting them in harm’s way so the state requires that you provide them with a policy that will cover medical expenses and so on if they get hurt during their course of employment.
Charmaine: Well, you’ve answered for us what workers’ comp insurance covers but could you go into a little more detail?
Marc: Absolutely. So, assuming an employee was to get hurt while on the job and it wasn’t too bad so they just needed to get some stitches or go to the doctor then the workers’ comp would cover those sorts of expenses. If there were more serious injuries there would be an element that covers that as well and that would be determined by the particular state and the severity of the loss. Most states have a schedule if someone’s got a permanent disability as a result of an injury, what they would pay for that in addition to medical bills. A temporary permanent disability, for example, if somebody can’t use their legs for six months but it’s not a permanent disability for their entire life but for a defined period of time each state would have a schedule as to what they would pay for these types of losses.
Charmaine: How is workers’ comp insurance calculated?
Marc: That’s a great question. Basically, the states want to tabulate and measure workers’ comp based on how dangerous of a job the employee has. So what they’ve done is broken up every single work classification and given it its own code and then there’s a rate per $100 of payroll. For example, clerical payroll is probably the cheapest rate out there and is, roughly speaking, $0.25 per $100 of payroll so if someone’s got $100,000 of clerical payroll then that would translate to approximately $250 in annualized premium. Whereas, if someone has $100,000 of roofing payroll then that could be something like $25 per $100 of payroll so that same $100,000 of payroll in a roofing company may cost $25,000 in terms of workers’ comp premium on an annualized basis.
Charmaine: Are there different types of workers’ comp policies?
Marc: The workers’ comp benefits are defined by the individual state so, in general, they work in a similar fashion but each state governs the way that the policies are handled and one can buy different limits. As part of the workers’ compensation policy, there’s something called employers liability for gross negligence on behalf of the employer. For example, if a truck has no tires and the boss insists that the employee do deliveries in that truck then there may be something called employers liability and those can have variable limits. In general, you need to refer to the individual state where the policy is being issued in order to determine what the variables would be for that specific policy.
Charmaine: Great. Who pays the workers’ comp insurance premiums?
Marc: The employer is required to pay the workers’ comp insurance premiums provided that it’s required in that state. For example, we’re in the state of Florida and for many businesses, it’s not required when you have less than four employees. It’s a good idea because the employer could be liable for all those claims but it may not be required by law unless you’re in a contracting business but the employer is the one who pays those premiums.
Charmaine: Ok, great. That was really informative. Thank you so much, Marc.
Marc: My pleasure.
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11098 Biscayne Blvd, Ste 100
Miami, FL 33161