Should Corporate Officers be included on Workers’ Compensation Policies?

Almost every business needs, and is required to have, workers’ compensation (WC) insurance. Most states (with a few important exceptions) essentially require employers to purchase a workers’ compensation insurance policy to handle their statutory obligations to workers who are injured or made ill due to a workplace exposure. We often have this question come up; should the company owners be included under the WC policy?
 
Reasons to add owners to WC policy
 
The benefits are the same for everyone covered under a commercial workers’ compensation policy, but officers many not have thought about these for themselves. Benefits include:

• Lost wage benefits with no waiting period or deductible.
• A death benefit as provided under state law.
• 24 hour coverage on foreign travel.
• If an owner or officer needs to be retrained as a result of an on the job injury, there is coverage for retraining.
• No co-pay like there is under medical insurance.

Reason not to add owners to WC policy

• In most cases the cost will be considerable. Take a small contractor; some carriers will assign a mandatory payroll of around $50,000 (depending on carrier). A small carpenter or carpentry company will be assigned class code 5645, current rate is 12.3728, which computes to an annual premium of $6,186! (example only)
• Disability insurance can be purchased for less than half the above amount.
• Many of above benefits can be manage through other risk transfer means.

It may not make sense for every owner or officer to consider this; it should be reviewed and considered periodically. In most cases the cost may be too high for the business to consider. Call our office today. Let one of our workman's compensation insurance specialist’s help you determine if this is an effective risk transfer tool.