Workers’ compensation insurance for technology businesses

From IT consultants to software developers, employees in every IT profession can suffer work-related accidents. Consequently, your tech business could be exposed to financial losses and litigation if you are held responsible.

Workers’ compensation insurance provides coverage in three primary areas:

• Employee work injury and illness expenses
• State law compliance
• Employee injury lawsuits

If an employee suffers a work injury or develops an occupational illness, your business can be held responsible for their well-being. Workers’ compensation insurance helps cover:

• Medical bills, such as an emergency room visit
• Ongoing care, such as physical rehabilitation and prescriptions
• Disability benefits while the employee is unable to work
• Death benefits for fatal incidents

Employer’s liability insurance is typically included in a workers’ comp policy. It provides protection when an employee decides to sue a business owner over an injury.

Employer’s liability insurance can help cover:

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

Without insurance, you might have to pay for a costly legal battle – even if the suit is frivolous.

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 is:
Classification rate  x Experience modification rate  x (Payroll / 100) = Premium

Each state has unique laws regarding workers’ compensation. For example, every technology business in New York must carry workers’ compensation insurance for its employees – even part-time workers. However, Alabama businesses are only required to carry workers’ compensation when they have five or more employees.

In most states, tech companies are required to provide workers’ comp as soon as they hire their first employee. Sole proprietors, independent contractors, and partners don’t have to carry workers’ compensation, but you can purchase a policy to protect yourself, too. It's a good idea, as health insurance providers can deny claims for injuries related to your work.

In certain states, IT businesses must purchase workers’ compensation insurance through a monopolistic state fund. Those states are:

• North Dakota
• Ohio
• Washington
• Wyoming

If you purchase workers’ comp through a monopolistic state fund, it probably won't include employer’s liability insurance. However, you can buy stop gap coverage from a private insurer to get this protection.

Even if your employees are in an office all day, they aren’t immune to harm. One of the most common work accidents is a slip or a fall that causes an injury. When an employee is injured at work, it can result in an insurance claim and a hike in your premiums.

Business owners can manage their risks through safety training and the reduction of workplace hazards. For example, you could tape down loose power cables, or install brighter lights in a dim stairwell. Taking these steps could reduce workplace injuries and help keep your insurance rates low.

Workers’ compensation insurance offers protection for your employees and to some extent your business, but it doesn’t provide coverage for all risks. Owners of small technology companies should also consider:

General liability insurance: This policy can cover expenses related to client injuries and property damage, along with advertising injuries like slander. Technology businesses can often bundle it with commercial property insurance for savings in a business owner’s policy (BOP).

Errors and omissions insurance (E&O): This policy is critical for IT consultants and other professionals whose work depends on their expertise. Also called professional liability insurance, it can cover lawsuits related to a professional error, such as a mistake that causes a client’s server to crash.

Cyber liability insurance: You may want to invest in this coverage to protect your own company’s data, such as clients’ credit card numbers, or to protect against client lawsuits related to data breaches.

Fidelity bonds: IT companies are often privy to sensitive client data. This means an employee could jeopardize your business through unlawful access, theft, or fraud. Fidelity bonds safeguard your business against employees who engage in certain criminal acts.

Commercial auto insurance: This policy is required in most states for business-owned vehicles. It can cover property damage and medical bills in an accident involving your IT company vehicle, along with theft, vandalism, and weather damage.

Are you ready to safeguard your IT business with workers’ comp insurance? Complete Insureon’s easy online application today to compare quotes from leading U.S. carriers. Once you find a policy that fits your needs, you can obtain coverage in less than 24 hours.