California is one of the states with the highest cost of workers’ compensation in the US after New York. This is because of the state’s high cost of living, high administrative costs, and high medical fees.
California is also one of the states with high permanent disability claims. That means companies must invest in the best workers comp insurance to protect themselves and their staff.
However, the good news is that workers’ comp insurance cost has been decreasing for some time now in California. That means small businesses in California can buy the best policy for themselves and their workers.
This article shows you the price and other information related to worker’s comp in California.
- How much does workers comp insurance cost in California?
- What factors affect the cost of Workers Comp Insurance in California?
- How to reduce the cost of workers comp insurance in California
- What does workers’ compensation cover in California?
- Requirements for workers’ compensation in California
- Why do you need workers’ compensation insurance in California?
- Best workers comp insurance companies in California
How much does workers comp insurance cost in California?
According to a recent study from the state’s rating agency, the average California workers’ compensation rate is about $2.25 per $100 of payroll. For example, if your company has a payroll of $100,000, you would pay a base premium of about $2,250 each year.
However, the annual cost of workers comp insurance premiums varies greatly from one firm to the next based on different factors.
Different insurance companies will give you different quotes and rates. Be sure to shop around with a few top companies or work with a broker or agency like CoverWallet or commercialinsurance.net to compare several quotes before making your final decision.
What factors affect the cost of workers comp insurance in California?
As we already mentioned, the cost of workers comp insurance differs. Usually, the first factor determining the differences in cost is the company that offers you the insurance. Different insurance companies have different quotes. In most cases, the companies generate their quotes based on the following factors:
Your business classification codes
The Workers Compensation Ratings Bureau of California (WCIRB) regulates workers’ compensation rates in California. The state awards every firm a “risk categorization,” which is subsequently assigned a monetary value recommended by the council every year. Insurance firms submit their “base manual rates” to the state through the board for approval for all class codes. The insurance companies can then determine the base rates for very firm according to the recommendation and approval of the state.
Your firm’s history of claims
Employee claims are submitted to NCCI and statistically compared to all other similar type firms in each state using the same class code. After a few years of coverage, your company may be eligible for an Experience Modification Rate if your claims are within acceptable limits. However, if you have a bad history of losses and claims, you might pay more for insurance. Some insurers may even reject your application.
Specific characteristics of your business
Insurance company underwriters in California can make premium rate modifications based on specific characteristics of your business. These characteristics include safety policies and management experience.
Companies with proper safety policies are easier to insure. That’s because a good safety policy would reduce the chances of accidents in the workplace. Therefore, such companies might get reductions in their premiums.
Also, insurers believe that companies with more years of management experience are better at handling work safety issues. More so, they have enough data that can predict how safe their company is. Therefore, such companies may also get reductions in their premiums.
How to reduce the cost of workers comp insurance in California
If you are looking for low-cost Worker’s comp insurance in California, the following ideas and guidelines may help you.
1. Verify the class codes of your company before payment
Classification codes are 4-digit numbers that put employers in categories and establish insurance prices across the country. The class code categorizes employees based on their proportional risk of harm, which means it will significantly impact your rate and your premium, as we discussed above.
A mistake in your code could mean you will be paying more than you should. To avoid that, you might want to double-check that the description for the allocated class code appropriately describes what your workers perform. If not, contact the insurer for an explanation or request that the class code assignment is re-evaluated.
Also, ensure that any additional employees, such as salesmen or clerical staff, are classified independently and not in the same category as your main employees.
2. Make sure your payroll is correctly calculated
Payroll (annual gross wages) should be totaled for each allocated class code after employees have been classified. Remember that rates are determined by class code. Therefore the rate per $100 in payroll will vary depending on the group. Payroll underestimation might result in a big bill following your yearly audit.
3. Examine the non-employee coverage requirements
Owners and officers frequently earn larger incomes, which might increase the cost of workers’ compensation. However, some of these officers can decide not to be covered by the policy. This will lower the cost considerably. However, remember that by omitting yourself from the policy, you are foregoing coverage and may have to pay for medical expenses out of pocket in a work-related accident.
4. Look around for workers’ compensation quotes.
Quotes for workers’ compensation might differ from one carrier to the next. Different rates and underwriting (the assessment of your company’s risk of a claim) are available from different companies.
So, shop around for estimates from other carriers — or, better yet, utilize an independent agency that can do the homework for you and offer you the best pricing.
5. Collaborate with your agent and ask for discounts
Inquire with your insurance company about discounts and other methods to reduce the cost of your premium. Depending on the insurer, some discounts you might enjoy include the following:
- Adjusted payment terms.
- No-claims discounts.
- Programs for workplace safety and loss prevention.
- Discounts for
- members of special groups.
- Payroll administration.
Paying for the insurance in advance or bigger installments may lower the amount of billing costs added to each payment, which can add up. Many companies also provide discounts for formal safety programs or training, numerous years of claims-free service, and other factors.
6. Prevent workplace injuries
Avoiding injuries is the best and easiest way to reduce workers’ compensation costs.
To do that, do the following:
- Create an employee safety manual.
- Implement a safety training program for new staff.
- Inquire with your insurance agent about safety and training resources.
- Make it compulsory that workers use proper safety equipment, such as protective headgear, glasses, and non-slip shoes.
Learn more at the cheapest workers comp insurance companies
What does workers’ compensation cover in California?
Workers’ compensation insurance is a policy that protects both employees and employers in the event of an injury or sickness at work. One aspect of the policy protects workers who are wounded, become ill, or die due to a work-related occurrence.
The other portion protects the employer by prohibiting employees from suing their company for medical expenditures if a workers’ compensation insurance is in effect. This is known as an exclusive treatment.
The policy typically includes a variety of coverages to give financial protection for work-related accidents and illnesses as follows:
Workers’ compensation will cover expenses incurred due to work-related injuries and illnesses, such as ER visits, ambulance transportation, diagnostic tests, and bills from doctors and hospitals. There is no necessity to specify who is at blame, and coverage is guaranteed if the accident or sickness is work-related.
If an employee cannot work due to a job-related accident or sickness, workers’ compensation insurance will pay the employee for missed income. In California, the policy might pay up to 66 percent of the average weekly wages, usually tax-free. The worker might also get a “Loss of Earning Power” benefit, which compensates a portion of the employee’s salary if they return to work on a restricted basis.
Funeral expenses and death benefits
If an employee dies due to a work-related accident or illness, workers’ compensation insurance will assist in paying for funeral expenses.
Requirements for workers’ compensation in California
Employers in California are required by law to offer no-fault insurance for occupational injuries and illnesses to all their employees. As far as a company has an employee, they must offer worker’s comp to that employee, whether they work full time or part-time.
In exchange, companies are not vulnerable to claims brought by injured or sick employees on the job. Employers cannot also compel employees to pay for or offset the cost of the coverage, and benefits must be available to all employees.
In California, failing to have workers’ compensation insurance is a crime. The California Division of Workers’ Compensation controls claim management and operates the workers’ compensation court system, which resolves benefit disputes. It is unlawful to discipline or dismiss a worker for submitting a workers’ compensation claim.
Sole proprietors and independent contractors may not be required to carry worker’s compensation if they work all alone.
Why do you need workers’ compensation insurance in California?
Most firms require workers’ compensation insurance for various reasons. For starters, if your company employs people, it is needed by law in California. Anyone who works for an employer is presumed to be an employee under California law. That includes part-time and full-time employees.
You will need workers’ compensation in California as soon as you hire new employees. The reason is that coverage for workplace incidents does not begin until you have purchased the policy. So, buying the policy when you have a new employee allows you to get the coverage in place before any of your employees are harmed or become unwell on the job. That way, you and your company aren’t held financially accountable if there is a claim.
Even though workers’ compensation is not needed for sole owners and independent contractors, they should strongly consider purchasing it. If you are injured on the job, this coverage can help cover your medical expenditures and a portion of your lost earnings while you are healing.
If your injury is tied to your job, your health insurance provider may refuse a claim, leaving you to pay these expenditures on your own.
Roofers and others in hazardous occupations may also need workers’ compensation insurance by law in California, even if they do not employ anybody else.
Best workers compensation insurance companies in California
There are hundreds of companies offering workers comp insurance in California, which can make it confusing and overwhelming for you to navigate the purchasing process. We have done the research and studied 30+ providers in California. Here are our recommendations of the best workers comp insurance in California:
- CoverWallet: Best for comparing several quotes online
- California State Compensation Insurance Fund: Best Overall
- Pie Insurance: Best Online Quotes and Purchase and Reasonable Rates
- The Hartford: Best for Added Coverages and Highly Reputable Insurance Company
- Biberk: Best for Online Quotes and Purchase and Financial Strength
- Huckleberry: Best for Affordable Monthly Rates
- Hiscox: Best from a reputable small business insurance specialist