Workers Compensation

Workers Compensation insurance is protection mandated by law for a worker and his or her dependents against injury and death occurring during the course of employment. It is not health insurance. The purpose is to provide financial and medical benefits to victims of “work-related” injuries and their families regardless of fault.

This does not apply to employees of the federal government as federal laws cover them. Other employees include people who work on the railroads, seamen, and people who unload and load vessels. In addition, Native American tribal enterprises are not required to comply with the act either.

The policy is rated using estimated payroll for the policy term and the limits selected. At the end of each policy term, the payroll is audited and the premium adjusted.

Every accident must be reported as soon as possible to the insurance carrier.

Requirements for when employers must purchase Workers Compensation insurance vary per state.

Wisconsin

  1. Usually employs three or more persons full or part-time. Must have insurance immediately.
  2. Employs one or more full or part-time employees to whom they have paid gross combined wages of $500 or more in any calendar quarter for work done in Wisconsin. The employee must have insurance by the 10th day of the first month of the next calendar quarter.
  3. If the owner is a farmer who employs six or more full or part-time employees (at one or more locations) on the same day for 20 days (does not have to be consecutive) during a calendar year.  The farmer must have insurance within ten days after the 20th day of employment.  However, family members are excluded as employees.

**This does not apply to employees of the federal government as they are covered by federal laws. Other employees include people who work on the railroads, seamen, and people who unload and load vessels. In addition, Native American tribal enterprises are not required to comply with the act either. Finally, other exceptions are domestic servants, some farm employees, and volunteers.

All workers compensation policies exclude the sole proprietor, partners, and members of limited liability companies unless they choose to be.

Corporate officers are counted as employees and are covered by the Act. In a corporation with not more than ten stockholders, no more than two officers may exclude themselves from coverage.

 Illinois

  1. Having one employee full or part-time triggers the requirement to carry workers compensation coverage.
  2. Sole proprietors (with no employees) are exempt but can purchase coverage.
  3. Employees who are family members must be insured unless they are corporate officers, work for an agricultural business that employs less than 400 days of labor per year or are immediate family members who live with the employer.

Iowa

  1. Having an employee that makes $1,500 or more during the 12 consecutive months before an injury.
  2. Sole proprietors and LLC members are not required to be covered but can elect coverage.
  3. Agricultural employers that have a cash payroll of $2,500 more in the calendar year before the injury.  Agricultural exchange labor, officers of a family farm corporation (and their spouse, parents, brothers, sisters, children, stepchildren and spouses of family members are excluded).

 Missouri

  1. Employers with five or more employees must carry workers compensation coverage. Construction businesses with one or more employees (including part time, full time, temporary and seasonal) require coverage. Corporate officers count towards the employee total.
  2. Sole Proprietors and partners are not required to be covered but can elect coverage. Close family member-employees and members of LLC’s are covered but can opt out.
  3. Farm laborers, domestic servants, real estate salespeople and commercial motor-carrier owner/operators are exempt from the above rules.

South Dakota

  1. All employers must carry insurance, regardless of the number of employees.
  2. Corporate officers and members of LLC’s are included but can elect to be excluded. Sole proprietors and partners are excluded but may choose to be included.
  3. Domestic servants working under 20 hours a week and less than six weeks in any 13 week period, farm/agricultural laborers, independent contractors, real estate agents, and owner-operators of trucks certified as independent contractors are exempt.

Arizona

  1. Most employers with three or more employees must carry coverage.

Those exempt are agricultural farm labor, domestic help, and employment by non-profit, religious, charitable or relief organizations.

Be sure to read the policy carefully to understand all coverages, limitations, and exclusions.