Workers' Comp laws exist in all 50 states, and provide a "no fault" means of funding medical, disability & death benefits to injured employees, usually replacing the tort process which required employees to sue. While some very broad generalizations can be made, the types of laws, benefit levels, insurance mechanisms & options, as well as many other features of Workers' Comp vary greatly by state.  

"Sole Remedy" states generally do not allow injured employees to sue employers (except in rare cases of outrageous employer conduct), and provide that all claims proceed through the workers' compensation benefit schedules. In states where employees retain the option of suing, the Employer's Liability portion of the Workers' Comp policy would respond, providing defense and claims payments.

States individually exercise great territoriality over this insurance line due to its grossly political nature. An online source for individual, state-specific details is available.

Most states now make insurance compulsory with heavy penalties for failure to insure. Many provide a state insurance fund for coverage which may, in a very few cases be the only source. ("Monopolistic" states: No Dakota, Ohio, Washington, Wyoming)

Absent insurance, employers can usually look forward to costly litigation arising from employee injuries. Anyone providing services to your business may assert an employment relationship. For information see the grizzly details.

Premiums for comp are charged by business classification, as a percentage of actual gross payroll. (Expressed as a rate per $100 of gross payroll.) Rates vary from less than 1% for low-hazard jobs up to well over 50% for hazardous occupations.

If your premium exceeds a certain qualifying amount (several thousand dollars) for at least two or three consecutive years, most states calculate an experience modification that must be applied to your premium. A state bureau collects your premium & loss history, compares it to a theoretical average for like businesses, then directs a credit or surcharge be applied to your premium based on the result. It is an arcane formula generally intended to punish those with heavier losses & reward those with fewer.

If you have employees injured outside your home state, they may well choose to seek benefits under the other state's system, if its payments are more generous. Employees might even seek benefits in both states. This can lead to ugly gaps in your insurance, since most policies cover only your home state unless scheduled for others. If you have employees at risk in another state, you should have any such state listed on your policy or consider purchasing coverage from a source within that other state. Along with the plague of other mandates, litigation & costs visited upon employers by our geniuses in law & government, workers' comp costs have driven the phenomenal growth of employee leasing & temp services, which finesse the workers' comp issue by putting it into the contracted service costs. Keep in mind, however that if you utilize these services you should obtain proof of their insurance.


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