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Workers’ Compensation Insurance

You choose employees for the value they add to your business — whether a key member of your management team, a skilled technician or your executive assistant. If anyone suffers an on-the-job injury, you want to try to take care of them and minimize lost productivity.

A workers’ compensation policy can address medical care and lost income for your employees, death benefits for survivors, and your potential liability for covered claims.

Workers’ compensation is the nation’s oldest social insurance program: It was adopted in most states, including California, during the second decade of the 20th century. The workers’ compensation system is based on a trade-off between employers and employees. Employees are entitled to receive prompt, effective medical treatment for on-the-job injuries or illnesses no matter who is at fault and, in return, are prevented from suing employers over those injuries.

As a result, California employers are required by law to have workers’ compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits. Workers’ comp insurance provides basic benefits, including medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits and a return-to-work supplement, and death benefits.

The vast majority of workers’ compensation claims are resolved without any problems. However, sometimes a disagreement can arise between you and your employee over issues such as whether the injury was sustained on the job or how much in benefits they are entitled to receive.

In 2025, California workers’ compensation benefits increased for Temporary Total Disability (TTD) and Permanent Total Disability (PTD). These increases took effect on January 1, 2025.

An experience modification, which is expressed as a percentage, compares the loss or claims history of one company to all other companies in the same industry that are similar in size. Generally, an experience modification of less than 100 percent reflects better-than-average experience, while an experience modification of more than 100 percent reflects worse-than-average experience. Accordingly, an experience modification that is greater than 100 percent usually increases the cost of an employer’s workers’ compensation insurance premiums, while an experience modification that is less than 100 percent usually decreases the cost of an employer’s workers’ compensation insurance premiums.

For those businesses that qualify, experience rating is mandatory. Today, more than 130,000 California businesses are experience rated, representing approximately 80 percent of all California workers’ compensation insurance premiums paid. Using information submitted by insurers, the WCIRB calculates and publishes experience modifications for each qualified business. Regardless of which insurer provides the workers’ compensation insurance policy, if an employer is experience rated, their experience modification must be applied to their policy.

It’s imperative to have an insurance agency/company that is in your corner helping with safety programs, as well as In-House Work Comp Adjusters and not Third Party Administrators that many carriers use.  This will help keep experience mods favorable and give companies the ability to give additional credits/discounts when warranted.

Call your local insurance professional for further information.  If you don’t currently have someone you’re working with in the Inland Empire, please reach out to our office, Craig Davis Family Insurance, and one of our agents will be happy to help you.

*Information in this article is derived from Farmers Insurance, California Department of Insurance, and WCIRB (Workers’ Compensation Insurance Rating Bureau).

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. cdavis@farmersagent.com.

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