Under Arizona law, it is mandatory for employers to carry workers’ compensation insurance for their employees. Employers without workers’ comp insurance may be guilty of a Class 6 felony.
Read on for who needs work comp insurance, who offers it, and how to buy it.
Workers' compensation is a "no fault" system; injured workers receive medical and compensation benefits no matter who causes the job-related accident.
By law, Arizona businesses are required to carry workers' comp insurance if they have any employees. Workers’ comp is mandatory regardless of the number of workers, whether they are part-time, full-time, minors, illegal immigration status or family members.
The few exceptions to this include:
Unlike some states, Arizona law does not make exceptions for corporate officers, directors and members of an LLC. They must be covered if they are considered employees.
Employers must comply with the state where employees work, regardless of where the business was founded or operates. If operating in multiple states, an All-States Endorsement might be needed to provide full coverage for employees.
To get workers’ comp coverage:
Arizona has a private market, which allows small businesses to buy workers' compensation from any insurance carrier or agency that is licensed to write in that state.
Arizona also maintains a state fund, located in Phoenix, that competes with the private workers' comp market. If you’re still having trouble finding coverage, you can contact NCCI, which will place you with a carrier through the state’s assigned risk pool.
Arizona has relatively low workers’ comp insurance rates, compared to the national average. But like many states across the country, Arizona is seeking a way to address opioid abuse. In early 2018, the governor supported legislation to protect injured workers from being over-prescribed opioids. These measures are also aimed at controlling escalating medical costs in the state workers’ compensation system.
Workers’ comp premium factors in the nature of your business (called your assigned class code), payroll of employees being covered and past coverage and claims. NCCI collects state and national data on workplace injuries, and recommends rates by class code. The Arizona Department of Insurance regulates and approves rates for Arizona insurance carriers, based on NCCI recommendations.
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Editor's note: Last updated on February 5, 2019