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How to Buy Workers' Compensation Insurance

Congratulations on your new business!
Starting a new business is an exciting—and busy—time. With so many other details of your business to focus on, workers’ compensation insurance probably isn’t one you’d like to worry about.

Here are quick tips to think about before buying your first policy that will save you time, money and hassle later.

Tips for First-Time Buyers 

Know where your employees will work. Workers’ compensation is regulated on a state-by-state basis and depends on where your employees perform work - not necessarily where the business was founded or is based. Who needs to be covered, where you can buy a policy and how much it will cost all depend are all mandated or influenced by state law. 

Learn More: Work Comp in Your State | Work Comp in Your Industry

Make sure your policy is comprehensive. If you’re going to have employees in multiple states, or employees traveling across state lines to work, make sure your policy covers these states as well.

Decide how many employees you plan to hire, and how much you plan to pay them. Workers’ compensation premiums are calculated, in part, by the kinds of work performed. Many businesses have multiple functions performed by different kinds of employees - right now you may just a few people who wear many different hats. It’s important to classify employees accurately - based on what they spend the majority of their time doing - because this could alter your premium dramatically. 

Don’t under-insure your business. Insuring your business for less than its true payroll can be a costly mistake. Annual workers’ compensation audits could result in an unexpected cost that cripples your cash flow, or worse - you could suffer a claim and not have sufficient coverage. 

Maintain a safe workplace. Instead, post the required work comp posters and establish formal safety programs and first-aid procedures, which reduce the possibility of claims and can make you eligible for lower premiums. Learn more >>  

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