How Much Is Workers Compensation Insurance?

Workers Compensation Insurance is one of the most important types of insurance for any California business owner to have. Not only is it important, but it is required for any California business that has employees. How are rates calculated? How much is workers compensation insurance? How do I keep my workers compensation insurance costs down?

We answer all of those common questions below. To get an understanding of the cost of workers compensation insurance, business owners need to understand how their workers compensation insurance rates are calculated.

How Are Rates Calculated?

Your Workers Comp rates are calculated based on a few different factors:

  • Annual Payroll
  • Number of Employees
  • Type of business
  • Your claims history (Experience Mod)

 

Your payroll typically includes employee wages or salaries, bonuses, paid time off, commissions, etc.

Each type of business will have different class codes based on the type of work your employees are doing. For instance, workers compensation for contractors is going to be significantly more expensive than that of a law firm. The job of a contractor is much more physically demanding, which puts them at a greater risk for a workplace injury.

Experience Mod

The experience mod is a method for calculating workers comp premiums based on your individual loss history. Your experience mod measures your loss history to that of other companies in your industry.

An experience of 1.0 means that your business performed precisely the way a company of your size and class should perform. When your mod goes over 1.0, it means that you have higher than average losses and results in an increase in premium. A mod below 1.0 is a credit mod and means that you will be getting a discount on your worker’s comp premiums.

How Much Should You Expect To Pay For Workers Compensation Insurance in California?

In 2018 the average cost was for workers compensation insurance was $2.25 for every $100 in payroll. That would mean a company with $200,000 in payroll would be paying $4,500 year.

Like I explained, this will completely vary from company to company based on the above factors.

Who Has To Purchase Workers Compensation?

In California, any business that employs one of more employees must provide workers compensation insurance. If you are a business owner and do not have any employees, you have the option to purchase workers compensation insurance to cover yourself, but it is not required.

Tips To Keep Your Workers Compensation Costs Down

  •  Check your class codes. Your business’s class codes categorize your employees and set rates for each different types of work your employees do on a regular basis. For instance, a business will have a separate class code for clerical employees and sales.
  • Pay as you go insurance: Instead of estimating your annual payroll and potentially overstating that amount, pay-as-you-go relies on real-time payroll to calculate premiums, which results in more accurate premium payments. This means that you will be less likely to be on the hook for a large audit adjustment at the end of the policy term because of under-reported payroll.
  • Implement an employee safety program: Preventing injuries can not only save lives but it will save you a lot of money on your workers compensation premium. The goal is to mitigate and remove any possible hazards that can lead to workplace injury or disease.
  • Find an independent agent: Lets face it, workers compensation insurance can be complicated at times. An experienced agent can help make the process as easy as pie. An independent agent will have access to a variety of workers compensation carriers. This will not only provide you with many different carrier options but independent agents provide a level of expertise that is critical to making sure you have the correct policy in place. They will also have access to carriers who offer pay as you go insurance.

Don Williams & Associates, we have followed proven methods to reduce the cost of your workers compensation insurance for business owners for over 60 years. Find out how we have been helping businesses in California save over 65% on their workers compensation here.

Common Questions

What happen if I don’t purchase workers compensation insurance and an employee is injured?

Failing to carry workers compensation insurance is criminal offense. Offenders would be looking at either a minimum $10,000 fine or potentially imprisonment for up to one year in county jail.

Not only would you be facing legal troubles, but if an employee is injured at work and you did not carry workers compensation insurance you are now going to be responsible for that employees medical bills.

What happens if the state finds out I am not carrying workers compensation insurance, even though no employees have been injured?

The state labor commissioner will issue a stop order. This means your business cannot operate with employees until workers comp is acquired. You will also be assessed a penalty that is the greater of the two:

1.2x the amount the employer would have paid in workers compensation premiums during the time they were uninsured.

2.$1,500 per employee that was employed during the period that they did not carry insurance.

 

What do I do if an employee is injured at work?

Within one working day of the injury or illness being reported you must provide the employee with a workers compensation claims form. You can obtain this for from your insurance carriers.

A copy of the completed form needs to be returned to the employee within one working day

If your injured employee is covered by a medical provider network make sure that the medical evaluation is arranged.

Pass along the claim form and your report of the injury/illness to the claims administrator within one day of receipt.

Authorize up to $10,000 in appropriate medical treatment.

 

For help with your companies workers compensation insurance, reach out to one of the insurance professionals at Don Williams & Associates today at 408-402-3646 or online here.