If you want to have a business with employees in Indiana, you have to have workers’ compensation. There’s no getting around it, but there are ways to save money. Here’s what you should know.
Indiana Mandates Workers Compensation for All Employers
Indiana requires all employers to carry workers’ compensation no matter how many employees they have. This is different from other states that exempt employers with a small number of employees. There are limited exemptions for employees covered by other federal programs and independent contractors. Certain very large employers may be able to self-insure by demonstrating adequate financial resources to cover potential claims.
If you have employees that work in another state, you need to follow that state’s laws.
Workers Compensation Provides Many Benefits
Workers’ compensation is not just an extra cost. It benefits both you and your employees. Workers’ compensation insurance covers medical bills, lost wages, and other expenses related to workplace injuries. This can be anything from carpal tunnel syndrome from typing to a fatal fall on a construction site. In many cases, your workers would be able to file a personal injury claim against you if workers’ compensation didn’t cover their losses, or you’d want to compensate them anyway as part of being a supportive employer. Since all businesses need workers’ compensation, the risk pool is large, and it actually ends up being very inexpensive compared to other types of insurance.
Indiana Has Fixed Workers Compensation Rates
While you can buy workers’ compensation from private insurance companies, you can’t shop on price. Instead, you look at your rates up in a table. Each industry and job type has a classification code. Industries and jobs where workers are at more at risk of injury have higher rates. Since most employers have employees doing different jobs, you may pay a different rate for each employee, depending on what they do.
It’s important to make sure you get your industry and job classifications correct so that you don’t accidentally pay too much or get fined for not having proper coverage.
Your Claims History Impacts Your Workers Compensation Rates
Only the base workers’ compensation rates are fixed. Your actual rate depends on your claims history. As with other insurance, if you have more claims, you pay more. If you have better than average safety, you may pay less.
To determine your final rate, you multiply the table rate by your experience modification rate. All employers start at 1.0 — that means an average number of claims and no change to your rate. If you have an above-average number of claims, your mod rises and your rate increases. If you develop a track record for above-average safety, your mod falls, and so does your rate.
Safety Lowers What You Pay
To reduce your claims, you want to promote safety. This includes basic steps such as the following.
- Provide safety training both upon hire and as periodic refreshers.
- Make sure employees have proper safety equipment and it’s easily accessible.
- Don’t allow time pressures to cause employees to cut corners on safety.
- Make sure managers are following and promoting your messaging on safety.
Talk to Your Insurance Agent
To learn more about how to promote safety or how much you’ll pay for workers compensation insurance, talk to your insurance agent. If you’re near Fishers, IN, Luxor Insurance is ready to help.