Workers' Compensation
WORKERS’ COMPENSATION INSURANCE
Do I need to have workers' compensation insurance?
A: Yes, California law requires employers to have workers' compensation insurance if they have even one employee. If you are a roofer and don't have any employees, you are still required to carry workers' compensation insurance. If you are a real estate broker you are required to carry workers' compensation insurance for your agents, even if they are independent contractors.
Out-of-state employers may need workers' compensation coverage if an employee is regularly employed in California or a contract of employment is entered into here.
Q: My spouse and I are the sole owners of our business. We have no employees. Are we required to obtain workers' compensation coverage?
A: Generally, coverage for sole owners is optional. You would, however, need to have workers' compensation coverage for any employee you may hire, even if it's just one employee, and even if it's just temporary employment. You should consult with your attorney, insurance agent or broker, or carrier regarding the specifics of your situation and your options.
Q: Are executive officers or directors of the company covered under its workers' compensation policy?
A: Generally, all employees of the company, as legally defined, including corporate officers and directors, must be included in the policy unless they are the sole owners of the firm. In the case of sole owners, they may elect not to be covered. Several sections of the California Labor Code must be considered to answer this question. You should consult with your attorney, insurance agent or broker, or your carrier regarding the specifics of your situation.
Q: Where do I get workers' compensation insurance?
A: You can purchase workers' compensation insurance coverage through an agent or a broker from any of the privately licensed insurers authorized to write policies in California. You can find a list of authorized insurers on the California Department of Insurance Web site.
If you can't find an insurer willing to cover your business, the State Compensation Insurance Fund (State Fund) is required to provide you with coverage.
If you belong to a trade association you might want to check with it first - some trade groups negotiate special rates for members. Your local chamber of commerce may also be a source of good advice.
Q: What about self insurance?
A: Self insurance requires state approval, a net worth of at least $5 million, net income of $500,000 per year and posting of a security deposit. While historically only very large companies could self-insure because of legal requirements, in recent years group self insurance, in which several small employers in the same homogenous industry pool their workers' compensation liabilities, has increased in popularity as an alternative to traditional coverage. Contact your broker or the state's Office of Self Insurance Plans for information on how to self insure.
A self insured employer has the option of administering its own workers' compensation claims or contracting with a third party administrator (TPA) to provide these services.
Q: How much does workers' compensation insurance cost?
A: Workers' compensation insurance premium rates are not regulated by the state. While the Workers' Compensation Insurance Rating Bureau - the licensed statistical agent for the state insurance commissioner - issues recommended rates and carriers must file their rates with the California Department of Insurance, rates can vary from carrier to carrier. Like any good consumer, you should shop around for a carrier that best meets your needs. Cost is one consideration, but there are other factors to look at: the services provided, ease of access to the claims adjusters, their familiarity with your industry, etc. If you have a broker or agent, he or she should be able to give you expert guidance.
Q: What determines how much I'll pay for my premiums?
A: A number of factors go into determining the annual premium your insurance carrier will charge. These include your industry classification, your company's past history of work related injuries (known as your experience modification), your payroll, any special underwriting adjustments such as use of a certified health care organization, and any special group or dividend programs you may be eligible for.
Cal-Pro Insurance partnering together with Contractors State License Services endorse the following insurance coverage and plans:
- General Liability
- Workers’ Compensation
- Business Auto
- Equipment/Tool Coverage
- Risk Management/Claim Avoidance
- Premium Financing/Cash Flow Solutions