Workers Compensation Insurance in California

What is workers compensation insurance?

Workplace injuries are a possibility in nearly all industries and settings. When an employee suffers an injury on the job, California employers could be held financially liable if they don’t have workers compensation insurance. 

Workers compensation insurance helps protect against claims stemming from on-the-job injuries and illnesses. In the event of a covered claim, the insurance can benefit both employer and employee.

Which California businesses need workers comp insurance?

In California, most businesses with employees are generally required to have workers comp insurance. Coverage is typically needed starting from the first day when an employee is hired.

Not obtaining workers compensation when it’s mandated can be a criminal offense under California Labor Code. This is classified as a misdemeanor, and may result in a fine of $10,000 and/or up to a year in county jail.

In addition to applicable legal requirements, not getting workers comp also opens up businesses to potential lawsuits filed by injured employees.

What types of claims does workers comp insurance cover?

Workers comp insurance usually safeguards against workplace injuries and illnesses experienced by employees. Coverage often includes protections for the following:

• Sudden Injuries (e.g., injuries from machinery)
• Sudden Illnesses (e.g. accidental poisoning)
• Long-Term Injuries (e.g. repetitive motion injuries)
• Long-Term Illnesses (e.g. from asbestos exposure)

Coverage generally applies if these sorts of incidents cause injury, illness or death.

It’s crucial for businesses to ensure their workers compensation policy complies with state requirements, and provides solid protection against the injuries and illnesses their employees are most likely to suffer. A specialized insurance agent can assist businesses in choosing a policy that delivers extensive protections.

What are workers comp insurance classification codes?

Employees are often categorized in workers compensation policies according to their specific industry. Classification is done using numerical codes standardized by the National Council on Compensation Insurance (NCCI). Some examples of classifications and their associated codes include:

• 0005: Nursery farm operations
• 2041: Manufacturers of chocolate and cocoa
• 7038: Small sightseeing watercraft
• 8803: Financial accountants and financial auditors
• 8829: Convalescent homes and nursing homes

In certain cases, NCCI codes are even more precise. For example, code 2143 represents cider manufacturers and 5190 denotes Christmas/holiday decorators. Code 2143 is for wineries, and code 0079 is for vineyards.

An insurance agent experienced in workers comp policies can help businesses verify that their employees are accurately classified following NCCI codes and standards.

Is workers compensation necessary when hiring independent contractors?

Workers compensation is typically needed when businesses hire employees who get W2 tax statements at the end of the year. However, coverage requirements become less clear when hiring independent contractors or subcontractors who get 1099 tax statements.

Since contractors are technically running their own businesses, companies that hire them often don’t need to purchase workers comp for independent contractors. But in some situations, businesses might still be required to secure coverage.

This is a matter that a knowledgeable insurance agent can help sort through.

How much are premiums for workers compensation coverage?

Workers compensation premiums are based on many factors, such as employee classification, employee salary, number of employees and any recent claims. There are still numerous other details that typically impact cost.

An independent insurance agent, who can show customized quotes from multiple insurers, can help business owners find out how much workers compensation will cost for their particular business.

How can businesses acquire workers compensation insurance?

If you need help getting workers compensation insurance in California, reach out to the independent insurance agents at Shannon Ellsworth Insurance. Our agents will work with you to make sure that your business has the workers comp coverage it requires. You can trust us to present the best policy options regardless of insurer, since we’re an independent agency.