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What Is Workers’ Compensation Insurance?

Workers’ compensation (WC) insurance is mandatory in North Carolina for most businesses. It protects both you and your employees in case of a work-related injury or illness. 

Why You Need Workers’ Compensation Insurance

Here’s a breakdown of why your North Carolina Business needs Workers’ Comp Insurance.

Employer Protection

Workers’ comp provides a no-fault system. This means employees can’t sue you for negligence in most cases if they get hurt at work. This protects your business from potentially expensive lawsuits.

Employee Benefits

If an employee gets hurt on the job, workers’ comp covers their medical bills and a portion of their lost wages while they recover. This helps ensure your employee gets the treatment they need without financial hardship.

Compliance With The Law

In North Carolina, most businesses with three or more employees are required to have workers’ compensation insurance. Failure to comply can result in fines and penalties.

Who Needs Workers’ Comp in North Carolina?

Any business with three or more employees is required to have WC insurance. This includes corporations, LLCs, partnerships, and even sole proprietorships with additional employees.

In North Carolina Are Independent Contractors Employees?

Independent contractors are not covered by the North Carolina Workers’ Compensation Act. However, it’s not really that simple. You could be liable for employee injuries if you subcontract work. The factors really come down to whether the worker controls their own schedule and way of work, or do you, the employer, control the contractor’s schedule and work? You could also be liable if your subcontractor doesn’t have workers’ compensation coverage. If one of their employees gets hurt or sick, you could be responsible for their medical costs. It’s important to make sure your business is covered properly so you are not coming out of pocket for unexpected expenses like these.

What Does A Workers’ Compensation Insurance Policy Cover?

A Workers’ Compensation (Workers’ Comp) insurance policy covers expenses related to work-related injuries or illnesses of your employees. It provides financial protection for both you and your employees in these situations. Here’s a breakdown of what a typical WC policy covers:

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Employee Benefits

  • Wage Replacement: If an employee is unable to work due to the injury or illness, WC provides a portion of their lost wages. The exact percentage and duration of wage replacement benefits vary by state.
  • Disability Benefits: In case of permanent disability from a work-related incident, WC may provide ongoing financial support to the employee.
  • Death Benefits: If an employee dies from a work-related injury or illness, WC may provide financial assistance to their dependents.
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Employer Benefits

  • Reduced Lawsuit Liability: Workers’ Comp helps shield your business from lawsuits filed by employees who get injured on the job since employees receive benefits through Workers’ Comp.
  • Lower Costs: Workers’ Comp can help manage the financial burden of workplace injuries. Without Workers’ Compensation, you would be responsible for all medical expenses, lost wages, and potential lawsuits.
  • Improved Employee Morale: Knowing they’re covered in case of an accident can improve employee morale and sense of security, potentially leading to better productivity and reduced turnover.

What Factors Affect Workers Compensation Insurance Rates In North Carolina?

Industry and Risk Level

This is a major factor. Businesses in inherently higher-risk industries, like construction or manufacturing, will pay more for WC insurance compared to those in lower-risk industries like office work. North Carolina uses a classification system with assigned class codes for different occupations. Each code reflects the level of risk associated with that type of work.

Claims History

Your business’s past experience with work-related injuries significantly impacts your rates. Companies with a history of frequent claims will face higher premiums as they pose a greater risk to the insurer. Conversely, a clean claims history can lead to discounts on your WC policy.

Payroll Size

Generally, the higher your total payroll, the higher your premium will be. This is because payroll directly translates to the potential for more employees getting injured and filing claims.

Loss Control Measures

Insurance companies reward businesses that prioritize safety and implement effective loss control programs. This might include employee safety training, accident prevention programs, and ergonomic assessments to minimize workplace hazards. Demonstrating such efforts can lead to lower premiums.

Competitive Market

North Carolina is a competitive WC insurance market. This means different insurance companies will offer varying rates. Shopping around and comparing quotes from multiple providers can help you secure the best deal.

Additional Factors That Might Have A Smaller Impact

Business Location: The location of your business might influence rates to a certain extent. Areas with higher costs of living might see slightly higher premiums.

Experience Modification Rate (EMR): This is a statistical rating assigned to your business based on your claims history compared to similar businesses in your industry. A good EMR can lead to lower rates.

Company Size and Age: Larger and more established businesses might receive slightly better rates due to perceived lower risk.

Insurance Companies And Brokers We Represent

Builders Mutual
Liberty Mutual
The Hartford
Frontline
Philadelphia Insurance

Lloyds of London
Berkshire Hathaway
NC Rate Bureau
Johnson & Johnson
AmWins
Hanover/RPS
Tapco

Applachian Underwriters
Jackson Sumner
IPC
Allrisks
Orchid

Workers Compensation Insurance FAQs

Workers compensation and employers liability is a form of no-fault insurance provided by the employer for the employee. The employee gives up certain rights to sue in exchange for protection from injuries incurred on the job.

Employers who have less than three workers are exempt from workers’ compensation in NC. If an employer is in the field of agriculture, they are also exempt from workers’ compensation if they have fewer than ten workers.

Form 18. Employers are required to provide this form whenever a report of injury or occupational disease has been received from an employee. This form MUST be filled out completely by the employee and submitted to the Industrial Commission in addition to the Form 19.

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