Intro to workers' insurance
Workers’ compensation benefits can be valuable for both employees and companies.
Workers’ compensation insurance can include compensation for medical bills, partial missed wages, rehabilitation expenses, and death benefits.
These are all benefits that can go to the employee. But why is workman’s comp important for the employer? Workman’s comp is not just a premium that a company pays each month or year; it also benefits the company. A workers’ compensation insurance plan helps incentivize safety and health at a workplace; many insurance companies, like CompSource Mutual, offer risk control and safety resources. Some workers’ compensation plans also include liability insurance for the company, which can aid businesses if lawsuits occur.
How workers’ compensation benefits employees and employers
An eligible employee can receive a wide range of benefits from workers’ insurance in the event of a covered injury.
Some examples of workers’ compensation benefits for employees can include:
- Medical expenses, such as hospital bills
- Partial replacement wages for days of missed work
- Ongoing prescription drug expenses
- Physical rehab
- Temporary or permanent disability payments
- Death benefits in the event of an occupational fatality
It should be noted that these benefits apply only to covered workplace injuries, illnesses, and fatalities. If an employee is intoxicated on the job, or gets injured while doing something illegal, they may not be covered by their workers’ insurance plan.
Workers’ comp for employers offers a number of benefits, such as:
- Establishing a culture of safety
- Reducing employee turnover
- Boosting employee morale
- Remaining compliant with state law
Workers’ compensation insurance is mandatory in most states. However, business owners frequently carry workers’ comp coverage regardless of these statues as the benefits can greatly outweigh the costs. Employees may feel safer or more secure working for a supportive company. Employees who receive sufficient medical treatment, and are paid for adequate time off for recovery, will likely not return to work still sick or hurt. Having a healthy workforce can also help a company’s bottom line.
Insurance companies offer resources that help business owners reduce workplace risks and hazards and meet state and local safety requirements. Having an overall safer environment helps prevent accidents from happening in the first place. Prevention is always a smarter solution than reacting to something after it has already happened. CompSource Mutual offers exclusive safety training resources and expertise geared toward Oklahoma industries.
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How workers’ compensation benefits are calculated
Calculating how much workers’ compensation insurance costs is a complex formula that takes the following variables into consideration:
- Employee payroll
- Business industry, or class code
- Experience modification rate, or eMod
Each year, the company pays a premium to have the insurance policy. Premiums are based on estimated annual payroll numbers. This number may change throughout the year, so typically, a workers’ comp audit takes place toward the end of the policy period, in which the actual payroll is compared to the estimated one. Then, the insurance company can make an adjustment.
However, the total premium amount is also affected by the company’s class code, which is a classification for the industry in which a company does business. For example, plumbing companies fall into a different class code than lumber mills. Each class code is assigned a different risk level and, therefore, a different price.
The company will also have an experience modification rate, or mod rate, assigned to it. This rate is based on the company’s history of workers’ comp claims. For example, a high-risk business that sustains a pattern of costly workers’ comp claims might have a higher mod rate than one with very few, inexpensive claims. This rate is a way to help regulate risk within the pool of policyholders for a given industry.
These factors help calculate how much the business pays for workers’ comp insurance. But how much does an employee receive?
Workers’ compensation benefits are not the same for every employee. When it comes to what an employee might receive in terms of workers’ compensation, there are also the following components to consider:
- type of injury
- severity of injury
These two factors are assigned different ratings to help gauge how much money an employee might receive for a covered injury or illness. The intent behind these factors is to provide “common sense” ways of understanding injuries; some injuries may result in larger payouts than others, as they are more severe in nature or have deeper implications. The severity rating also ranges from temporary to permanent; an employee who permanently loses the use of one hand may be eligible for workers’ compensation disability payments, such as permanent partial disability payments. The system that governs disability payments is complex and takes many factors into account, such as whether the employee can return to work at all (but perhaps in a different capacity or role).
Why CompSource Mutual
Founded in the heart of Oklahoma City, CompSource Mutual has worked hard to provide the best workers’ compensation insurance to Oklahoma businesses. We offer valuable risk control resources to our policyholders to help protect Oklahomans on the job. From safety videos to on-site inspections, CompSource Mutual provides essential resources for helping to reduce your business’s risks.
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What are some different types of workers' compensation benefits?
There are typically five basic types of workers’ compensation benefits: medical care, temporary disability benefits, permanent disability benefits, supplemental job displacement benefits, and death benefits. Injured workers may be entitled to one or more of these benefits.
How can a business know what its workers' compensation rate is?
A workers’ compensation rate, or insurance premium, depends on many factors. Some of these factors include: the insurer’s standard percentage (typically calculated at a certain rate per every $100,000 of the business’s payroll); the business’s experience modification rate; and the industry in which the business operates.
Where can a business owner get a work compensation policy?
Usually, workers’ comp is administered by private companies. It may be regulated by the state, but a business owner can purchase a policy through a company like CompSource Mutual. Request a quote to get protected with CompSource.
Is there a specific type of Oklahoma insurance for Oklahoma businesses?
If a company is based out of Oklahoma, that company should purchase an Oklahoma-specific workers’ comp plan. Companies are also subject to workers’ comp regulations as administered by the state of Oklahoma, so it’s crucial that the insurance company is familiar with all relevant state laws. When you work with CompSource Mutual, you gain access to our industry expertise built over 85+ years serving Oklahoma businesses.
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