You need workers’ compensation coverage — now — but how much should you expect to shell out?
It’s a familiar situation. You need workers’ compensation coverage now, but are unsure of how much you should pay. Until you clear the air, you’ll always wonder if you’re buying the right policy, from the right company, and at a reasonable price.
How Workers’ Compensation Insurance is Calculated
The cost of workers’ compensation insurance varies based on four factors:
- The U.S. state where employees work: Workers’ compensation is regulated at the state level — not by the federal government. These state-by-state differences can cause premiums to vary greatly from one state to the next.
- The company’s industry: The greater the risk for physical injury or illness, the more you’ll pay for coverage.
- Size of the business: Total payroll has the biggest impact on the cost of coverage, since premiums are calculated per $100 in payroll.
- Workplace safety record: If your business has a history of filing claims, you can expect to pay a higher premium in the future.
Taking into consideration the factors above, prices can range from $100 or less per month to $1,000 or more.
For example, coverage for a clerical worker in Indiana can be purchased for approximately $30/month. However, coverage for an Indiana plumber — a field with a greater risk of injury — may fall in the $140 to $150/month range.
The Cost to Get Work Comp Coverage Today
When you need workers’ compensation coverage, you can’t afford to delay your purchase even one day. The potential fines and penalties for non-compliance pose too big of a risk. Fortunately, the upfront cost of securing coverage may be less than you expect.
Like most insurance policies, workers’ compensation insurance can be purchased and paid for in installments throughout the policy year. With a payment plan, you’re only responsible for making the initial installment payment.
Take for example a policy that costs $1,000/year. Some of your options could include:
- Annual payment: Pay $1,000 upfront so you don’t have to make monthly payments.
- Bi-annual payments: Pay $500 upfront and another $500 in six months.
- Quarterly payments: Pay $250 per quarter.
- Monthly payments: Pay approximately $83 per month.
Prices may vary slightly depending on how much you pay upfront. You’ll get the best deal by paying for your policy in full and in advance, but this also requires the largest initial outlay of cash.
If you’re on a tighter budget, paying monthly is often the best choice. Just remember that you may pay slightly more over the long run.
Some insurance companies offer "pay-as-you-go" insurance, calculated based on current payroll instead of projected payroll. That means employers are only paying for the coverage they're actually liable for at any given time. As payroll fluctuates, the premium will update automatically.
For other payment options, premiums are based on estimated annual payroll, and during the annual policy audit, actual wages are calculated and reported. The policyholder is then credited or debited based on any differences.
Verify That You Have Coverage
Now that you understand the cost of getting coverage today, it’s time to take action.
The most logical first step is to request a workers’ compensation quote online. This will give you a clear idea of what you can expect to pay for coverage, however, this doesn’t mean that you have an active policy.
And remember: The policy must be bound in order to have coverage. A quote doesn’t equate to an active policy. It also doesn’t protect you or your employees or prevent non-compliance penalties. A policy is only active after you’ve verified that you have coverage with your insurance provider.
At WorkCompOne, we make it easy to receive a workers’ compensation quote within a matter of minutes. From there, you can compare companies and policies, review your payment options and make a final decision.