Photo by Jennifer Hall.

Workers' compensation coverage, often referred to as workers' comp, is an insurance that pays employees who have been injured on the job. Benefits cover all medical costs related to the injury and disability benefits cover employees unable to return to work. Workers' comp also protects employers from lawsuits relating to workplace injuries and will typically eliminate the messy litigation between the employee and his/her employer should it arise. This coverage is state-run and almost universally required of businesses--only a few states do not require coverage and only a few types of companies (i.e., with five or fewer employees and in a few specified industries) are not required to have a policy in force.

In my career as an independent insurance professional and in specializing in securing insurance for the land surveying profession, I have had my share of processing claims with workers' comp. In many conversations with land surveyors countrywide, I hear that they often purchase this type of insurance because they are required to do so by a contract. What they don't realize is that it is required by law and that they have different providers to choose from.

The decisions to be made regarding workers' comp are many, and can be confusing. Here is some information to guide you in purchasing workers' comp insurance.

Q. What I should know prior to purchasing a policy?
A.Workers' comp policies can be expensive, and prices can vary widely based on the number of employees a company has as well as its total payroll. It is worth the time for companies to shop around and ask the same questions of several providers, comparing their answers and prices.

Private providers may be able to get a discounted rate if they are members of an association. Several associations have negotiated reduced rates with insurance providers. Discounts are also available based on a company's previous safety record on the job or in the workplace. For example, if a company has had no accidents on the job during the past three years, or if it operates a smoke-free workplace, an insurance provider may offer a reduced rate.

Q. Does my business need a workers' comp policy?
A.Since this is a state law, companies should contact their state workers' comp office for specifics. However, most states require any business with one or more employees to carry workers' comp; failure to do so can result in hefty fines. Sole proprietors and partners in a business are not considered employees and are not typically covered by workers' comp policies. They may elect coverage for an additional premium. Active corporate officers and LLC members are considered employees and are automatically included under a policy unless they own at least 10 percent of the business, which allows them to reject coverage. Companies should verify that they have 24-hour coverage with a medical provider prior to excluding anyone from a workers' comp policy. Not all health care providers will cover work-related injuries. Also, a workers' comp policy does not replace the stand-alone disability or life insurance policy a firm may have.

Q. What is a premium audit?
A.The premiums paid on an estimated basis will be audited at the end of the policy period to compare the actual payroll to the estimated payroll for that period. The audit will result in either an additional premium if the payroll is higher, or a return premium if the actual payroll is lower.

Q. When my employees travel out of the state on business, does my workers' comp policy cover those work-related injuries should they occur?
A.Yes. Most companies will cover compensable work-related injuries sustained as long as the workers are temporarily working in another state for less than six months at a time. If a business has operations in other states, it may be eligible--and necessary--to obtain other states' coverages for those state employees. Companies need to contact their insurance professionals to discuss this directly to ensure they are covered while traveling outside of their home states.

Q. What is a designated medical provider and how do I choose one?
A.Employers have the right to designate the medical provider their employees will see when injured on the job. This designation will help in the administration of work-related injuries, and aids the communication between employer and the injured employee. Some providers apply a potential discount of 2.5 percent to the premium.

Q. Will I get a Certificate of Insurance to furnish to my clients?
A.Firms should contact their insurance professionals for the issuance of Certificates of Insurance. Most carriers will allow the contracted agent to issue these directly to clients. Firms who request special wording may require underwriting approval prior to issuance.

Q. Are all workers required to be covered by workers' comp?
A.In most states, and in most circumstances, all workers are at least required to be covered by workers' comp. However, employers do not have to provide coverage to independent contractors. In this case, the issue of whether a worker is an independent contractor or an employee can get tricky. In short, an employer should look to its state laws to determine if the worker should be covered; in most cases, it will be required.

Best Hiring Practices

If you believe that a company is judged by the people it keeps, then hiring the right people should be your top priority. While there are no foolproof methods for finding the best workers, there are steps you can take to improve your chances of getting the type of employees that will help make your company stand out. And by hiring the best employees possible, you may also reduce your chances of potential workers' comp claims, which can impact productivity and your bottom line.

Follow these tips during the hiring process:
  • Talk to your attorney, HR professional or association group to find out how you may legally screen applicants in your state.
  • Have a written job description.
  • Require a written application from each candidate onsite.
  • Interview the candidate face to face.
  • Make it clear to all applicants that you may review motor vehicle reports, and/or conduct drug tests and credit checks.

Preventing Injury

An apple falls from a tree. It's bruised. Bumped, the glass of milk spills all over the table. Now the apple won't be as good and the milk has made a mess. It's too late to pick the apple and prevent the bruise, too late to move the milk and prevent the spill. The same thing happens so often concerning safety on the job--we react after someone is hurt or things are damaged.

Job safety analysis is a way to prevent work-related injuries. It can certainly be a good training tool for workers new to the company or new to the job. Below are some common work-related categories submitted under workers' comp policies.

Sun effects.Don't get burned! The sun can be hazardous to your health, especially in the day-to-day exposure typical of a surveyor. Skin cancer rates have increased in the past decade. Wear sunscreen--SPF 15 or higher--and reapply it every two hours; wear a hat and sunglasses to protect against UV rays; wear tightly knit clothing to keep the sun from penetrating your skin; avoid reflective surfaces, which can reflect up to 85 percent of the sun's damaging rays; and of course drink plenty of water.

Vehicle safety.The No. 1 cause of work-related fatalities is transportation accidents. And drivers and occupants of pickup trucks have the lowest buckle-up rate in the nation--less than 65 percent, according to the National Safety Report issued by Pinnacol Assurance, Colorado's largest workers' comp insurer, and Fireman's Fund Insurance Company.

Here's what you can do: Never ride in a vehicle if there aren't seatbelts for all occupants; always buckle up before starting a vehicle; and wear your seatbelt whenever you are in a vehicle, even while running a short errand. Most accidents happen close to the destination.

Office safety.Office workers face dangers every day that they may not be aware of. Here are some Do's and Don'ts for the office: do report slippery or uneven floor surfaces; do keep file and desk drawers closed; do report any poor lighting; do use dollies or proper lifting techniques while moving heavy items; don't leave cords, papers or boxes in aisles; don't use extension cords unless necessary; don't leave combustible trash in the office; and don't overextend your sitting without a break.

Finding ways to prevent the safety hazards we face every day is sometimes exhausting. However, keeping employees aware of the dangers lurking around them or the potential hazards that exist in the workplace will help enlist their cooperation in reducing, eliminating or reporting potential problems.

The above information is general information that may apply to many business operations; however, it is not comprehensive on the subject of workers' comp. To develop a plan specific to your unique business operations, contact an insurance professional in your area.