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Many employers are unaware of exactly what workers compensation is and what the employer’s requirements are. This article is intended to go over workers compensation with a focus on New Jersey based businesses.

Workers compensation is based on where your company is located and where your employees work and reside. It provides compensation for injuries that workers have obtained through their course of work.

To start, you will get a policy from an insurance company licensed to do business in your state. The individual state sets the rate per hundred dollars of payroll and classifies your occupation. An occupation that has a high occurrence of injuries on the job, will have a higher rate than a company that is classified with an occupation with less occurrences.

When a policy is initially written you are asked to estimate your payroll. This estimate is used to get the policy in force. At the end of the policy year the insurance company will ask you for the previous years payroll information or you can have an independent auditor perform the task of determining if your estimates were accurate. This will result in an audit bill or a credit.

Many of the workers compensation policies are written to include disability coverage such as New Jersey. Some states like New York require you to purchase a separate disability policy.

Sometimes an employer finds it difficult to obtain a workers compensation policy from an insurance company due to the hazardous nature of their work. In this case, the state will assign an insurance company to provide coverage.

Many business owners continually look for lower worker compensation rates when it is unnecessary. If the correct payroll and ratings information is used the rates from different companies will be the same.

I hope this article demystified workers compensation insurance for you, if you would like further information please contact one of Technology Insurance Associates’ brokers.