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Workers’ Compensation Insurance

The California workers’ compensation marketplace today remains generally healthy for insurers, employers and injured workers, according to Bill Mudge, President and CEO of the Workers’ Comp Insurance Rating Bureau.  Mudge said a stable lost cost environment coupled with the growing California economy has contributed to eight consecutive advisory pure premium rate reductions approved by the insurance commissioner from 2015 through 2019.

Who is required to purchase workers’ compensation insurance?  All California employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700.  If a business employs one or more employees, then it must satisfy the requirement of the law.

Executive officers and directors of corporations must be included in workers’ compensation coverage, unless the corporation is fully owned by the directors and officers.  If the directors and officers fully own the corporation, then they may elect to be excluded from workers’ compensation benefits.  Fully owned corporations may want to discuss the option to include or exclude their officers and directors with a licensed commercial broker-agent.

Where do I get workers’ compensation insurance?  Employers must purchase workers’ compensation insurance from either a licensed insurance company or through the State Compensation Insurance Fund (State Fund).   A commercial broker-agent can assist a business with purchasing workers’ compensation insurance from a licensed insurance company and can assist with information on State Fund and self-insurance.  State Fund is a state-operated entity that exists in order to transact workers’ compensation on a non-profit basis.  State Fund competes with private workers’ compensation insurance companies for business and also operates as the insurer of last resort if private companies are not willing to offer workers’ compensation insurance.

What determines how much I’ll pay for my premiums?  A number of factors go into determining the annual premium your insurance carrier will charge.  These include your industry classification, your company’s past history of work-related injuries (known as your experience modification), your payroll, any special underwriting adjustments such as use of certified health care organization, and any special group or dividend programs you may be eligible for.

The “hidden” costs of workers’ compensation claims:  The direct costs associated with workers’ compensation claims- such as medical and indemnity expenses- are covered by your workers’ compensation insurance policy.  But what about indirect, or hidden costs?  These costs need to be considered, as their impact on the cost of a claim can quickly add up.  These indirect costs include:

·       Time lost from work by injured employees

·       Time lost by supervisors to investigate accident

·       Economic loss to an injured employee’s family

·       Time lost by fellow employees

·       Cost of training replacement

·       Loss of production

What can you do to help reduce claims?  Employee training and education is an important component of a workplace safety program.  Ask a trusted employee to be responsible for inspecting your premises and reviewing operations monthly.  Also ask each employee to identify and eliminate workplace hazards.  You should record this information to evaluate your company’s progress in hazard detection and correction.

Contact your local insurance agent-broker to help you navigate the process and find the right fit for your company’s insurance needs.

Craig Davis Family Insurance Agency has been proudly serving customers in the valley since 1990.  Their motto has always been “Let Our Family Serve Your Family’s Insurance Needs”.

Written by Craig Davis

Craig Davis is an agent for Farmers Insurance and the owner of Craig Davis Family Insurance located at 27625 Jefferson, Suite 100, in Temecula. He may be reached at (951) 699-1776.

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