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Workers’ compensation coverage for insurance agents

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Workers’ compensation insurance

Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.

Workers’ compensation protects employees at your insurance agency

From claims adjusters to insurance agents, no insurance worker is immune to injury. If an employee is injured at your office or becomes ill on the job, your business could be expected to cover medical bills and wages while the employee recovers.

Workers’ compensation insurance can help pay for an injured employee’s:

  • Immediate medical costs, such as an ambulance ride
  • Ongoing medical costs, such as physical therapy
  • Partial lost wages due to time away from work

Workers’ comp protects insurance business owners

Usually included in a workers’ comp policy, employer’s liability insurance offers protection when an employee decides to sue a business owner to recoup hospital bills and other damages.

Employer’s liability insurance can help cover:

  • Attorney’s fees
  • Court costs
  • Settlements and judgments

Even if a lawsuit is frivolous, without insurance, you could find yourself paying for a costly legal defense.

How much does workers' comp cost for insurance businesses?

The amount you pay for workers’ compensation is a specific rate based on every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and your payroll (per $100).

The formula providers use in underwriting to calculate workers' comp rates is:

Workers' compensation premium calculation formula

State laws set workers’ comp requirements

Every state has a unique set of laws for workers’ compensation. Insurance businesses in Illinois, for example, are required to carry workers’ compensation insurance for their employees. This includes part-time workers. On the other hand, agencies in Texas are never required to carry workers’ compensation.

While independent contractors, sole proprietors, and partners don’t have to carry workers’ compensation insurance, you can purchase it to shield your claims adjuster company or other insurance business. It's a good idea to carry coverage even when it's not required, as health insurance companies can deny work injury claims.

Monopolistic state funds for workers’ compensation

In certain states, insurance businesses must purchase coverage through a monopolistic workers' comp state fund. Those states are:

If you purchase workers’ comp through a monopolistic state fund, it might not include employer’s liability insurance. However, you can purchase it as stop gap coverage from a private insurance company.

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Lower workers’ comp costs with risk management

Even office workers are at risk for an injury. They could slip on a wet floor, trip over equipment, or get carpal tunnel syndrome from too much typing. If an insurance agent or broker is injured on the job, it could lead to an insurance claim – and a rise in your premium.

You can manage your risks by providing safety training and reducing hazards in the workplace, such as uneven flooring. Through something as simple as teaching proper lifting techniques, it's possible to reduce workplace injuries, along with insurance rates.

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Other important insurance policies to consider

Workers’ compensation protects your employees and to some extent your business, but it does not provide complete protection. Owners of insurance agencies should also consider:

General liability insurance: This policy can cover expenses related to customer injuries and property damage, along with lawsuits over slander and other advertising injuries.

Business owner's policy (BOP): This policy combines general liability insurance with commercial property insurance, typically at a lower rate than if the policies were purchased separately.

Errors and omissions insurance (E&O): This policy, sometimes called professional liability insurance, can cover legal fees if a client sues over an insurance agent's work performance.

Commercial auto insurance: Insurance businesses that own vehicles need to carry this policy to comply with state laws. It helps cover costs if a vehicle gets into an accident.

Cyber liability insurance: This policy helps insurance businesses pay for costs related to data breaches and cyberattacks. Any small business that handles sensitive information should carry this coverage.

Get free quotes and buy online with Insureon

Are you ready to protect your employees with workers’ compensation insurance? Complete Insureon’s easy online application today to compare quotes from top U.S. carriers. Once you choose a policy, you can begin coverage in less than 24 hours.

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Updated: November 3, 2023
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