Workers’ Compensation Overview
Workers’ compensation insurance was established as a result of the increased number of lawsuits against employers for work-related injuries to their employees. Through the Florida workers’ compensation law, employers in the state agree to provide medical benefits and a fixed amount of indemnity (wage replacement) benefits to their employees that get injured during the course and scope of employment. The worker’s compensation law was actually lobbied and supported by employers because the law includes the “great trade-off”, in which employers are protected because the injured employee agrees to give up his/her right to sue the employer if they receive benefits for the injury.
The Workers’ Compensation Policy
The policy for workers’ compensation insurance is divided into six parts. The first part defines the workers’ compensation coverage that is offered in the policy. The second part defines the employers liability coverage offered in the policy, which provides liability coverage to protect the insured for the possibility of a lawsuit that results from an employee injury. The third part of of the policy defines the coverage provided in other states where business was not conducted at the policy period, but develops during the policy year. The last three parts specify the insured’s duties in the event of an injury, the rating procedure, and the conditions that apply to the policy.
The classification system’s objective is to group employers and their payroll into classifications that reflect the exposures common to the work performed. In Florida, these classifications are created by NCCI, the National Council on Compensation Insurance. There are roughly 600 classification codes used in our workers’ compensation system.
Rates and Premium Calculations
The premium paid for a workers’ compensation policy is based off of your business’ employee payroll. The manual premium is calculated by multiplying the payroll in each classification code by the current rate established by the state government. There are then many other credits and fees that are applied before you receive the estimated annual payroll. Each policy will also be audited to determine the actual payroll during the policy period and adjustments will be made to the premium.