California Workers’ Compensation Insurance Basics for Small Business Owners
In any occupation, workers face a range of risks even when employers take all due precautions. An injured or sick employee unable to get prompt medical treatment can cause losses through decreased performance or absenteeism. He or she may also file a lawsuit against the employer. Workers’ compensation insurance can benefit both employers and employees. Getting benefits helps employees treat their conditions quickly and effectively, while employers are protected from being dragged into long and costly lawsuits.
Which Employers Are Required to Have a Policy?
California law requires all employers to have a workers’ compensation policy, no matter how many employees they have. A single employee can obligate you to get workers’ comp. California also differs from many other states in requiring roofing companies to carry workers’ compensation insurance even if they have no employees.
Where Can Employers Obtain Workers’ Compensation Policies?
Business owners have several options for obtaining the required insurance. A private insurance company must have a license from the California Department of Insurance to provide workers’ compensation. Because workers’ comp can implicate numerous state laws and regulations, look for an insurer with experience and thorough knowledge of all aspects of obtaining an effective policy for your business.
The State Compensation Insurance Fund is a non-profit operated by the state that also offers workers’ compensation policies. If, for whatever reasons, private insurers will not sell you a workers’ comp policy, you may stand a better chance at obtaining one from the State Fund.
Self-insurance is another option. In the past, only very large companies could afford to self-insure, as the process requires approval from the state, a security deposit and a huge net worth. Some small employers may choose to combine resources and self-insure as a group.
Are There Required Rates for Policies?
California does not set forth requirements for workers’ compensation insurance rates. However, it does provide recommended rates and requires insurers to submit their rates to the Department of Insurance, which maintains this information. Thus, you may see a difference in rates depending on the carrier. Variations in rates can also reflect the level of services provided, as not all carriers may have the same industry expertise, networked healthcare providers and processing speed for claims.
How Do Insurers Determine Premiums?
Your business’s premium can also vary based on a number of factors concerning your industry in general and your company’s specific history. Insurers generally evaluate the typical risks in your industry as well as data on your company’s previous injury rates. Other factors may include location and payroll.
While this basic information provides a good starting point, you need to speak with insurance experts to get a better idea of how workers’ compensation insurance would work for your business. Learn more by giving us a call at (707) 823-3689. Get updates by following our social media feeds on Facebook, and LinkedIn, or subscribing to our blog.