When are Workers' Compensation Required?
Workers' compensation insurance is the best option for agents looking to profit from a niche market. Agents must get into this profitable market. To be able to benefit, they must understand the conditions when compensation program is required.
Every state has different regulations on the requirement of workers' compensation. Agents should be familiar with the compensation laws of the state in which the client's business operates. If the client company has headquartered in one state and the employees work in another state, then they might need to buy coverage based on the laws of each state where the employees work.
Generally, compensation program is not required until a company has employees other than owners or partners of the business. However, if the sole proprietors want to cover themselves under workers' compensation insurance, then they can get insured under the compensation program.
Furthermore, some states also do not require compensation programs in companies where employees get hired on a commission basis. In some areas, independent contractors are also not considered to be employees. Independent contractors like freelancers and consultants are not entitled to compensation benefits.
Volunteers in an organization are also not entitled to workers' compensation benefits. However, there are some exceptions, like some state cover compensation for volunteers like firefighters. Moreover, some states provide options to organizations for covering for their volunteers.
Failure to carry out the required workers' compensation insurance could lead to an organization being subject to administrative penalties. These penalties range from fines to stop-work orders. The requirement for coverage by the worker's compensation program further depends upon the type of business and the type of operation it carries.
Agents must be aware of the requirement of coverages and compensation for different business organizations. It can help them to provide better services for clients. Agents must help the client compare workers' compensation quotes from leading insurance carriers. These quotes and policies should differ according to the size of the business and industry.