When choosing a workers compensation policy, business owners may question whether or not to include themselves in the policy. After all, one way for the cost of an insurance policy to be brought down is to have it cover fewer people. The businesses that often have the highest workers comp costs are those which include significant physical labor.
Mills and factories, construction crews, and anyone working with hazardous chemicals will all have significantly higher costs for workers comp insurance policies than office workers or even retail sales associates. In fact, if you run a non-hazardous business, get quotes that both include and exclude your officers to compare them.
Why Skip Officers When Calculating Workers Comp Coverage?
When you consider the ways someone is most likely to get injured in a hazardous job, the answers tend to involve problems with machinery. A carpenter injures themselves with a nail gun or a machine operator gets caught up in the machine during repairs, for example. Executives who hardly or never interact with the tools that cause injuries are inherently less likely to become injured at work.
Since workers comp policies don’t separate out certain employee classes due to their type of work, and since policies are calculated by state wage minimum and maximum limits, keeping officers on the insurance plan can be significantly more expensive than leaving them off.
How You Waive Coverage?
Each state has different laws regarding how officers waive their right to workers comp insurance, so it’s important to speak to someone who knows your local laws well. States have become more careful about who is allowed to remove themselves from coverage after numerous lawsuits were caused by vague wording.
Your local chamber of commerce, your state organization, or an insurance agent familiar with state law and workers comp policies may all be able to assist you in finding the right way to refuse coverage.
How Are Officers Covered If They Are Injured At Work?
There’s a reason we say “accidents happen.” It’s not possible to be entirely sure that someone will never be injured at work. An officer touring a job site could injure themselves with a tool, for example, and even in the most quiet of offices, slipping and falling is possible. It takes much less than people think to strain a muscle.
And remember, workers compensation doesn’t just cover the medical costs incurred in an injury; it often covers lost wages during temporary or permanent disability. The company might be able to pay medical costs out of pocket, but replacing executive lost wages for weeks or months while keeping someone else in place to do the work can be very difficult.
If an officer is choosing to reject workers compensation coverage, it is important they contact their health insurance company. Many health insurance companies have exclusions for injuries that occur at work or on someone else’s property, or that they are the “payer of last resort.” This means that even if they will potentially pay for an injury that occurred at work, or at someone else’s home, the insured person will have to show that all other insurance companies have been billed and refused to pay.
So officers should start with contacting their health insurance company to find out if work related injuries would be covered. If so, the officer is probably fine and doesn’t need to worry about medical costs (though those lost wages should still be considered). If a health insurance plan does exclude work related injuries, the next step is to ask if the insured person can add a “24/7” rider to their plan. This means that the plan will pay for any injury or medical cost that arises, no matter where it happened.
If the officer has health insurance through their own company, this may be less involved. If their insurance is privately purchased, or is through a spouse or other family member’s plan, the company may be less willing to create this coverage.
Should Officers Be Exempted From Workers Compensation?
To be really sure whether or not company officers should skip workers comp insurance, you should:
- Check state law and make sure your company allows officers to be excluded, and that your business qualifies
- Find out what officers need to do to be exempted
- Consider quotes both with and without executive coverage for workers compensation
- Ensure that an officer’s health insurance will be willing to pick up medical costs if necessary.
Once you have gathered all your company information, you can make the right choice for your business. For a huge number of companies, excluding officers from workers compensation coverage will save the business money without harming the workers or the officers.
