If you are a business owner and one of your employees sustains a work-related injury, he/she can typically seek workers compensation insurance. This form of insurance, also called workman’s comp, provides injured employees with a series of benefits that can help cover medical expenses and replace lost income, among other things. Should an injured employee sue you, workers compensation insurance can often help cover your legal payments. According to the Insurance Information Institute, net premiums written for workers comp in the United States in 2018 totaled more than $45 million.
What Is Workers Compensation Insurance Exemption?
Many states legally require companies to obtain workers compensation insurance, especially businesses in certain high-risk industries (e.g. construction, manufacturing, air transportation, etc.). Specifically, 39 states and the District of Columbia require that every employer with at least one employee provide this type of insurance, according to the Insurance Journal. Failure to obtain workman’s comp insurance can result in penalties.
However, if some of your workers are not employees (e.g. independent contractors), you can potentially apply for an exemption for these workers. This signifies that you are not obligated to provide these workers with benefits if they become injured or fall ill after performing certain job duties.
Who Is Exempt From Workers Comp Insurance?
Not every state makes workers comp insurance mandatory for independent contractors and self-employed individuals. That may also apply to four other types of workers: farm workers, government workers, shop owners, and volunteers. Let’s look at each of these categories more closely.
Farm and agricultural workers are typically exempt from workman’s compensation insurance because they are generally at low risk of suffering severe work-related injuries or illnesses (due to the nature and circumstances of their work). According to data from the Bureau of Labor Statistics, the fatality rate among “farmers, ranchers and agricultural managers” in 2017 was 24.0 per 100,000 full-time equivalent workers. By comparison, the fatality rate for “all workers” in the U.S. that year was 3.5 per 100,000 full-time workers. Among fisherman (and other related workers), the 2017 fatality rate was 99.8 per 100,000 workers.
According to IRMI, an insurance and risk management information website, 15 states do not require providing workers comp for farm workers or migrant or seasonal workers. These states include Georgia, Alabama, South Carolina, and Tennessee.
In certain states, such as Delaware, government workers are exempt from workman’s comp insurance. State or local-level government workers typically work in office settings, deal with people, and perform either clerical tasks or help draft legislation, depending on their specific job duties and level of experience. They do not generally operate dangerous machinery or perform any other work-related tasks that may lead to injuries or illnesses.
Owners of small shops are also exempt from workers comp insurance because they work in low-risk settings. Business owners, generally speaking, are permitted to exempt themselves from workers compensation insurance coverage in most states. Be sure to always remain informed about the specifics of your state’s laws on this subject.
Volunteers are typically not paid for their work, which means entails that they are not eligible to receive benefits either. As an example, if you are the owner of a nonprofit organization that frequently enlists help from volunteers, you won’t need to worry about providing these workers with workman’s compensation insurance.
Other examples of workers who are sometimes exempt from workers comp insurance include railroad employees and maritime workers. In order to receive a workers comp insurance exemption, your company will need to submit to your state’s screening process. You will likely need to provide:
- Employee information
- A detailed description of your business
- Proof of ownership
- Up-to-date business license
- Your workers comp insurance carrier’s contact information
Reach Out To Professional Business Insurance Brokers
Speak to the professional business insurance brokers at Southern State Insurance in Alpharetta, Georgia for more information on exemptions from workers compensation insurance. Since our founding in 1992, we have grown to become one of the largest, privately-held independent insurance agencies in the Southeastern United States. Our client base extends to several parts of the country.
At SSI, we are proud to offer a wide variety of options that are tailored to meet your unique needs and budget, as we partner with some of the nation’s top insurance carriers (Allstate, AIG, Liberty Mutual, etc.). We also place a major emphasis on creating value and on forming deep, long-lasting relationships. With us, a typical workers compensation insurance policy covers medical expenses, lost wages, permanent disability, rehabilitation costs, and death benefits. Call Southern State Insurance today at (888) 971-6304 or contact us online to request a quote.