When you own a business and one of your employees gets injured or diseased due to working conditions or by an operational accident, one of two things can happen. If you do not have a worker’s compensation clause in the contract, you can get sued by the employee, and your payout is not limited by anything except the capricious legal system. You might pay nothing or you might be forced into bankruptcy. It all depends on the specifics of the case and the effectiveness of your legal defense.
If you do have a worker’s compensation insurance clause in the employment contract, the employee does not have the right to sue because as part of that contract, they (and you!) voluntarily relinquish that right in exchange for a limited but guaranteed (and much faster) payout set by legal statute. Now while those payouts are limited, that does not mean they are easy for a business to absorb. They can still easily amount to hundreds of thousands of dollars for a single incident.
This is where Worker’s Comp Insurance comes into play; in the event that one of your employees is injured or becomes sick due to their work, the payout is covered (minus deductibles) by your insurance policy.
Premiums Vary by Jobs Covered
The payouts for each job are set by state statue, so it makes some sense that your premiums are set by a similar action. In the state of Florida, there is a group that sets rates. For example, the rate for Dairy Farmers was $5.14 in 2014. The employer multiplies that number by 1% of the worker’s anticipated salary, and that amount is added to the total premium. So a farm with seven dairy workers each making $45,000/year would pay ($5.14 * 45 * 7) or $1,619.10 to cover those seven workers with Workers Compensation.
That number is further modified by other factors; including the company’s history of making claims, their number of years in business and others.
Worker’s Comp Policies Are Fairly Similar
The truth about worker’s compensation policies is that there is not a whole lot of variation from one policy to another. With almost all of the relevant numbers set by statue, and the premium rates deliberately set to reflect the risk inherent in each job, there are not a lot of variables to tweak in one direction or another.
That said, what differences there are can have significant impacts on your business; particularly for startups where every dollar matters. While a larger, more stable business could switch WCI providers and not really notice, entrepreneurs and family businesses can benefit from having an experienced independent agency like Spickelmier sit down with them and help find the best policy for their needs. If you need a workers comp policy for your Florida business, contact us (904) 471-7155 or stop by our office to discuss your options.