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Work Comp for Business Owners

Work Comp for Business Owners

It is often said in business that the largest single expense to employers is actually their employees. Many business owners agree, especially when you include benefits, paid time off, and insurance.

One place a business owner may look to save money is on Workers Compensation Insurance premiums. In particular, the owner may elect to exclude himself from coverage.  Here are some things to consider when deciding whether to exclude yourself from coverage under the Workers Compensation policy.

When It’s A Bad Idea To Exclude Yourself

In most states, coverage is automatically extended to an owner or officer.  This is a good thing, for the following reasons:

Your medical insurance won’t cover you for an on-the-job injury. Coverage can be denied and referred back to workers compensation in the case of an on-the-job injury.

Your family needs your income. A major on-the-job-injury might mean you can’t work for weeks, months or longer. If you don’t have short or long term disability insurance, your lost income could be a burden to your family.

Owner/officer payroll is capped. No matter what your take home pay, there is usually a cap in most states on how much of your owner/officer payroll can be used to calculate premium. Your insurance broker can tell you what the cap is.

Certificate Holders require it. Some certificate holders, particularly government entities and large contractors, may require that all employees be covered, even owners.

When It’s A Good Idea To Exclude Yourself

Any good insurance broker would recommend that owners and officers be included on the Worker’s Compensation policy. However, there may be a couple of instances when you should exclude yourself.

The owner is the only employee. It can be difficult to place coverage for only one employee. If you are the only employee, talk to your broker about the proper forms that need to be filed to be in compliance with state labor regulations.

The owner/officer has coverage elsewhere. If your health insurance includes a rider covering business operations. You should also be sure that you have disability insurance for both short-term and long term, as well as life insurance and burial insurance, should the unthinkable happen on the job.

The Bottom Line

Talk to your broker about your options as an owner or officer under your Workers Compensation policy.  As the business owner it is important to cover yourself in the event of work-related illness, injury or death to protect both your business and your family.

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