Insurance for Your Business: Workers' Compensation Insurance
July 2005
We continue our series on business insurance with Workers' Compensation insurance. Workers' Compensation is a no-fault insurance system that provides wage replacement, medical, and rehabilitation benefits to employees that are injured at work. Being no-fault, it requires the employer to be responsible for the payment of benefits regardless of whom or what caused or contributed to an injury or illness that is connected with a job. At the very minimum, these Workers' Compensation insurance policies will cover an employee's medical expenses and reimburse him or her for some percentage of lost wages.
Most companies are required by state law to carry Workers' Compensation insurance. Some states have developed state funds, or pools, for Workers' Compensation insurance, but in most states businesses must find a private carrier for this type of insurance policy. The coverage offered tends to be fairly comprehensive, although state workers' compensation laws often exempt domestic, farm, and other "casual" workers. Moreover, independent contractors, being self-employed, are not covered by these laws.
The laws governing the amount and duration of lost income benefits, the provision of medical and rehabilitation services, and how the system is administered vary from state to state. In Washington, state Workers' Compensation is administered by the Department of Labor and Industries. A comprehensive employer's guide can be found at:
If you have employees in Washington, there are several state requirements. First, you must open an industrial insurance (read: Workers' Compensation) account with the Department of Labor and Industries. Usually the information on your state Master Business Application showing employees will be automatically forwarded to Labor and Industries when the Department of Labor processes your application. Second, you must file a quarterly report of workers' hours and pay your insurance premium. In Washington, this can be done electronically at:
Lastly, be sure to display the required Workers' Compensation poster and information in a conspicuous place in your office. The required material can be downloaded from:
Once you've met these initial requirements, remember that it is your responsibility to monitor and update your employment history to ensure the proper rating with the state.
Because it is mandatory for most companies, some small business owners think of Workers' Compensation insurance as a burden, an expense, or a commodity product providing only a basic level of benefits to employees. However, if you get a good workers' compensation insurance quote, the financial burden of protecting your employees will be significantly lessened.
