Workers’ Compensation Insurance in Tennessee
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Tennessee workers' compensation insurance

Tennessee businesses with five or more employees are required to carry workers’ compensation insurance. This policy covers the cost of medical treatment and provides partial wage replacement for injured workers.

Who needs workers’ comp insurance in Tennessee?

Tennessee mandates strict workers’ compensation insurance coverage for most employees. Every firm with five or more employees must provide workers’ comp insurance. As in many other states, Tennessee applies a complex process for determining whether someone is an employee versus an independent contractor.

Family members, part-time workers, and corporate officers are included in determining employee count as long as they meet the state’s definition of employee.

Construction business or trades that have one or more employees must have workers’ comp. However, if a single employee is a sole proprietor, partner, corporate officer, or limited liability company (LLC) member of a construction firm, then that person can apply for an exemption. Coal mining firms with employees must also provide coverage.

Employers that don’t have to buy workers’ comp insurance due to their size can purchase it anyway. However, they must file the “Exempt Employers Notice of Acceptance of the Workers’ Compensation Act of Tennessee” (Form I-8) with the Tennessee Bureau of Workers' Compensation.

If an employer that opts in by filing Form I-8 decides to subsequently cancel its workers’ comp insurance, it must notify the state using the same form.

Do small business owners need workers’ comp insurance for themselves?

In most cases, small business owners who are their firm’s sole employee are excluded from workers’ comp coverage. This applies to:

All of the above may elect to be covered, which is a smart financial move. Your health insurance might not pay for a work-related injury, which could leave you paying expensive medical bills out of pocket. Workers' comp also provides disability benefits for disabled workers and death benefits for fatal incidents.

If you decide to buy workers' comp on your own, you will have to file a form with the state.

How much does workers' compensation insurance cost in Tennessee?

A small business owner calculating their workers' comp insurance payments

The average cost of workers’ compensation in Tennessee is $50 per month.

Your workers' comp premium is calculated based on a few factors, including:

  • Payroll
  • Location
  • Number of employees
  • Industry and risk factors
  • Coverage limits
  • Claims history

How can Tennessee business owners save money on workers' comp?

To save money on workers' comp insurance, it's important to make sure you classify your employees correctly. Employees with desk jobs or other jobs with a low risk of injury cost less to insure. This also helps you avoid misclassification fines.

In some cases, small business owners can choose to buy pay-as-you-go workers' compensation. This type of workers' comp policy has a low upfront premium, and lets you make payments based on your actual payroll instead of estimated payroll. It's useful for businesses that hire seasonal help or have fluctuating numbers of employees.

Finally, a documented safety program can help lower workers' comp costs. A safer workplace means fewer accidents, which helps keep your premium low.

How does workers’ comp work in Tennessee?

Workers' compensation insurance covers the cost of medical care for work-related injuries and occupational diseases. It also provides partial wage replacement while employees are recovering and unable to work. The injured employee must see an authorized treating physician to receive benefits.

Tennessee workers' compensation benefits include:

  • Medical benefits, including mileage reimbursement, surgery, and prescriptions
  • Temporary total disability benefits
  • Temporary partial disability benefits
  • Permanent total disability benefits
  • Permanent partial disability benefits
  • Death benefits

Workers' comp policies usually include employer's liability insurance, which can help cover legal expenses if an employee blames their employer for an injury. The exclusive remedy provision in most workers' comp policies prohibits an employee from suing their employer once they accept workers' comp benefits.

For details, visit the Department of Labor and Workforce Development's page on benefits.

How to buy workers' compensation insurance in Tennessee

Tennessee business owners can compare quotes and purchase a policy from private insurance companies. Insureon offers this service with its online insurance marketplace.

If you’re unable to purchase workers’ comp insurance through this voluntary market because of your firm’s age or high-risk status, you can purchase coverage from Tennessee’s assigned risk plan, which is managed by the National Council on Compensation Insurance (NCCI). This is the Tennessee workers’ comp provider of last resort.

Tennessee employers who qualify can also self-insure their workers' compensation claims. This means they’ll pay for their own workers’ comp benefits rather than submit them to an insurance company.

To qualify for self-insurance, you must file an application with the Tennessee Department of Labor and Workforce Development.

What are the penalties for not having workers’ comp in Tennessee?

The penalties for violating Tennessee’s workers’ compensation statute can be severe. They include:

A 25% penalty for not paying (or not paying in a timely fashion) the state’s mandated temporary disability benefits. The penalty goes to the worker involved, not to the state.

Up to $5,000 for failure to comply in a timely manner with a specialist’s or administrator’s designee’s order.

A penalty for insurance companies or self-insured employers that don’t file claim forms on time with the state.

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Tennessee workers’ compensation law for death benefits 

If one of your employees dies as a result of a workplace injury or illness, the person’s surviving dependents are entitled to receive death benefits. The insurance company or self-insuring employer pays for these benefits, which include wage replacement and burial expenses.

Wage replacement benefits depend on the circumstances of each case, including:

  • If the deceased employee had no dependents, the insurer will pay $20,000 to the person’s estate.
  • If the person leaves a surviving spouse, but no dependent child or children, the insurer will pay 50% of the person’s average weekly pay, not to exceed the maximum weekly benefit.
  • If the deceased worker leaves a surviving spouse and a dependent child or children, the insurer will pay two-thirds of the average weekly wage to the surviving spouse for the benefit of the worker’s family.

Workers' compensation in Tennessee also covers burial expenses up to $10,000.

Workers’ compensation settlements in Tennessee

A workers’ compensation settlement is an agreement between the injured employee, the employer, and the employer's insurance company that terminates a workers’ compensation claim. This benefits both the employee and the employer.

The Tennessee Department of Labor and Workforce Development allows settlements of workers’ comp claims. However, state law requires a state workers’ compensation judge to review and approve the agreement.

In Tennessee, the workers’ comp settlement process is designed to ensure that employees receive the benefits to which they are entitled under state law and that they understand their rights.

Workers’ compensation statute of limitations in Tennessee

In Tennessee, employees must file a workers’ comp claim (Form C40B) within one year of the date of injury or illness.

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If you are ready to explore workers’ comp insurance options for your Tennessee business, start a free online application today to compare quotes from top-rated insurance carriers.

Updated: February 5, 2024
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