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Workers Comp Insurance

Workers Comp Insurance

What is Missouri Workers Compensation Insurance and why does your business need it?

Since the beginning of time it seems, but more accurately the beginning of the industrialized era, employers and employees have been at odds over who’s “at fault” when it comes to work related illness or injuries.  Prior to the current workers compensation system, employees were forced to sue their employers in civil court for their injuries, and employers would use common law defenses to protect themselves against allegations of negligence.  A very messy and inefficient system.

Today’s workers compensation system is considered a state-mandated, "no-fault" insurance system, where injured workers receive benefits that cover medical care, lost wages and disability. In return, employers receive immunity from civil lawsuits by injured employees.

Who’s required to carry Workers Compensation in Missouri?

As an employer in the state of Missouri, you’re required to carry workers compensation insurance if you have five or more employees. That is, unless you’re in any of the construction trades. Contractors must carry workers’ compensation if they have just one or more employees.

Employers with fewer than five employees can still purchase coverage, and probably should.  Just because an employer is exempt from the state requirement to purchase coverage, the exposure to a civil lawsuit by an injured employee is still a looming possibility in the absence of coverage.

The type of business entity you’re operating has implications on coverage requirements as well.

  •          Sole proprietors and partners in a partnership are considered employers and are not covered unless they elect to be covered.

  •          Close family member employees, and members of an LLC are covered unless they opt out.

  •          Officers of a corporation are covered and may only opt out in limited circumstances.

Many of the frequently asked questions about who’s in, who’s out, and who’s legitimately exempt can be answered here by the Missouri Department of Insurance, or here by the Department of Labor.

What if an Employer fails to provide Workers Compensation Insurance?

Purchasing Workers Compensation coverage will seem inexpensive when you consider the potential penalty for not doing so. According to the Missouri Department of Labor, An employer who knowingly fails to insure its workers compensation liabilities is guilty of a class A misdemeanor and may be liable to the state of Missouri for a penalty of up to three times the annual premium or up to fifty thousand dollars, whichever amount is greater. A subsequent violation is a class E felony.  Ouch!  That’s just the state penalty.  The injured employee can also file suit.

How Do I get Workers Comp for My Employees?

Workers Compensation coverage is available from your local insurance agent, like us, who represent multiple insurance company partners that voluntarily write policies in Missouri.  Those insurance carriers make up the “voluntary market”. In fact, we think Bill White Insurance is a great place to get a quote and purchase workers compensation insurance for your business in Springfield Missouri!

How Much Does Workers Compensation Cost for Small Business?

A thing or two about the rates from companies providing coverage in the voluntary market. A work comp “rate” is expressed as the rate per $100 of payroll.  Individual companies have been using their own rates without the approval of the Missouri Department of Insurance since 1994. That means rates are not standardized, they may vary significantly from company to company, so shop around. It also means the company that voluntarily writes your policy assumes all the risk for the claims paid by their policy. The best companies with the most competitive rates protect themselves by setting higher underwriting standards and may not have an appetite for certain “higher risk” classes of business.

What if no voluntary market carriers want to insure my business?

If you can’t find coverage in the voluntary market, there is a mechanism set up to ensure that employers can obtain workers comp coverage.  It’s called the “assigned risk market”. Many employers are in this market because they’re engaged in inherently risky industries or have bad loss experience. In Missouri, the assigned risk market is administered by Travelers and can be reached by calling 800-842-9346.

Why Purchase Missouri Workers Compensation Coverage from Bill White Insurance?

Well…first and foremost we just love providing work comp coverage for small business and frankly we don’t care how large or small you are.  As a small business ourselves, we’re constantly looking for new ideas that just make good business sense

To that end, we’ve partnered with innovative insurance carriers to provide better work comp solutions like Pay-As-You-Go Workers Comp.  Don’t feel bad if you haven’t heard of it, only about 10% of small business owners say they have, but once they know about it, they want it!

Pay-As-You-Go Workers Compensation

Most small businesses today either run their own payroll with a subscription to services like QuickBooks or have outsourced payroll processing to save time and avoid errors.

The Pay-As-You-Go Workers Comp model simply integrates with QuickBooks or your existing payroll service. Your premium is calculated on actual payroll for each payroll cycle, then your payment is automatically deducted a few days later. Small business owners and payroll professionals see clear advantages of this service including:

  •          Improved Cash Flow

  •          No Large Down Payments

  •          Minimal Audit Adjustments

  •          No billing Fees

  •          Hassle Free Setup

Our company partner The Hartford, a leading writer of work comp for small business, offers the payroll billing option XactPay and is currently working with over 60 payroll providers  Watch and learn the details in this short video.

Compared to the traditional method of installment billing based on payroll estimates, the following chart is a great visual representation of the benefits of payroll billing.

Payroll Bill Chart

To find out more about Missouri workers comp insurance and other business insurance products and services, contact us today.