Workers comp is a compromise:
Benefits are paid regardless of who is to blame for the accident or injury. This "no-fault" status is key to workers comp — the employer does not admit liability for the injury or illness, and the employee recoups workers comp benefits without having to sue. There's no room in the world of workers comp for horseplay, or illegal drugs, though — if any of those lead to an injury, workers comp insurance won't pay. The same goes for self-inflicted injuries, and for injuries incurred while a worker is off the job, committing a crime, or violating company policy.

How Much Coverage?
Each state mandates how much coverage you, the employer, must buy, and what percentage of the employee's salary you'll pay if he or she misses work due to a work-related injury.

Just to make things a bit confusing, not all states require all employees to be covered under workers comp insurance: Frequently excluded workers include business owners, independent contractors, domestic employees in private homes, farm workers, maritime workers, railroad employees, and unpaid volunteers.

Purchasing Workers Compensation Insurance
When it comes to purchasing worker's compensation insurance, your options are limited by the state in which you live and the national rates that affect your premiums.

Because requirements are clearly defined by each state, workers compensation insurance packages themselves are fairly standardized, with little variation among different companies' basic policies. Basic workers compensation coverage includes medical treatment, rehabilitation costs, and lost-wage replacement, covering up to two-thirds of an employee's regular salary while he or she is out of work. Most "good" workers compensation policies also include liability coverage, which applies if a worker's family sues the employer for damages stemming from a workers compensation claim.

Choosing a Workers Compensation Insurance Agency
Consider the following factors when looking at Delta Work Comp Group to help you obtain & control the cost of workers compensation insurance for your business:

• Industry experience: At Delta, because we specialize in workers comp, we're familiar with your type of industry and which insurance companies are the best fit.

• Knowledge: Which premium discounts are available to you? We diligently work to uncover discounts for you, and will advocate for you during the premium-negotiation process.

• Customer service: We accept claims 24 hours a day, and have 24-hour toll-free telephone service.

• Prevention programs: You can save money with loss-control programs; we have the resources you'll need to begin a program.

• Claim review, audit accuracy: At Delta Work Comp Group we are dedicated & vigilant about accurate claims reporting to the National Council on Compensation Insurance.  The reason for this is simple... inaccurate claim reports affect your premiums for three years.  We also review insurers' audits of your payroll — if your workers are misclassified, you could be paying a bundle in premiums for no good reason.

• Multi-State reach: At Delta, we have the ability to write out-of-state policies. You'll need them if you have a mobile or multi-state workforce.

Failure to carry Workers Compensation Insurance
Failure to carry it exposes the employer to pay what the insurer would have paid, plus severe fines, and possibly jail time for violating the law. The benefits may amount to hundreds of thousands of dollars. The employer has a legal duty to ensure that employees get the legally mandated benefits without delay.

Controlling your workers comp premium
Although the state controls what employers must cover with workers compensation policies, it doesn't however set your premiums. Instead, your insurer uses multiple variables to determine your risk level and how much you should pay. However, if you have good workplace safety programs and a proven record of low injury rates, you can qualify for various state-mandated credits and discounts once you've reached a certain premium level.

The starting point for calculating your workers comp premium is the "base rate" for your state, which is a rate classification usually provided by the National Council on Compensation Insurance, and calculated using actuarial analysis of businesses in your industry. For example, the base rate for florists reflects the probability of any one florist making a workers comp claim, and is calculated using years of data.

Workers comp insurers classify employees using 700 numbered "occupational codes."  Most businesses receive only a few different classifications to describe their operations. When you first sign up for workers comp insurance, your premium is primarily determined by what portion of your payroll is allocated to each classification, with different classifications carrying their own risks of injury. For instance, a small business with 20 employees, 15 of whom operate heavy machinery, is at a much higher risk of injury than a 20-employee business where everyone has a desk job.

Rates are determined partially by classification, based on each $100 of payroll. Consequently a clerical employee might have a rate of $0.20 per $100 of payroll, multiplied by the number of employees in that category. Whereas a roofer might have a rate of $15 or $20 per $100 of payroll, because of the hazardous nature of the job and the experience with claims. It's nearly impossible to pin down an average workers comp premium because it varies so widely. There's a wide difference between a service-oriented situation, as opposed to high-hazard manufacturing, and you can see the disparity in the workers comp premiums.

After three years, the insurance company reconfigures your premium payments by factoring in an "experience modification factor" — a rating based on your claims history relative to claims made by others in your industry and state. Both the frequency of your claims and the dollar amounts paid out by the insurance company are considered, so your final premium reflects a combination of your losses and the insurer's expenses.

There's a mandatory procedure for calculating experience modification. Each company has an 'expected loss' amount based upon a formula determined by the classification of the business and the amount of payroll. If a company's claims are higher than expected, a debit modification is applied to their premium. If they're lower than expected, a credit will be given. That's the starting point to determine the final price.

Your first year's premium is based on industry averages, but your second year premium can change, depending on your company's safety performance. The insurance company will audit your payroll, possibly making adjustments that will affect the premium. For instance, if you've added several workers in a risky category, that will be reflected in your premium.

Your premium: Keeping it down
There are ways to lower your premium, though. The insurance company takes into account factors that might not be reflected in the experience rating: Did your company grow during the past year? Did you improve your workplace-safety programs? If the insurer decides these factors point to good loss-control in the future, you might earn a lower premium.