GuardPartners

Arizona Workers' Compensation FAQ

The law states that you must carry workers' compensation insurance if you have employees. Many small business owners don't know a lot about their workers' compensation commitments, nor the insurance they carry. It benefits small businesses to understand their workers' compensation insurance, where to get it, and how much it will cost.

Please review our Arizona workers' compensation FAQ, designed to help small business owners like you understand workers' compensation insurance.

What is Workers' Compensation?

Workers' compensation insurance, sometimes referred to as "workers' comp" or " workers' comp" covers your employees when their job causes an illness, injury, or death. Benefits included in a typical workers' compensation policy are medical expenses, vocational rehab, lost wages, and death benefits.

For example, if you own a construction company and one of your employees falls off a backhoe, your workers' compensation policy would likely pay your employee's medical bills, physical therapy, and approximately two-thirds of the wages lost during your employee's recovery time.

Workers' compensation exists both as a way to benefit injured workers and as a way to protect employers. Before workers' compensation laws existed, serious injury to an employee could bankrupt an employer. Workers' compensation is a no-fault insurance system. Assigning negligence to a worker or employer is not an issue in paying benefits.

Which Companies Need to Carry Workers' Compensation Coverage?

Generally, all companies with employees need to carry workers' compensation insurance. It's the law! Requirements vary from state to state - each state has its own workers' compensation laws, as well as its own administrative and legal structure for handling claims and disputes.

Several states don't require workers' compensation insurance for very small companies - those with fewer than 3-5 employees. Sole proprietors and partnerships may also be exempt. Think twice before you exercise this option. Without coverage, an injured employee could sue you for medical and disability costs, plus damages.

Some states also require workers' compensation only for employees in "hazardous" occupations. What falls under the "hazardous" category, however, can vary widely, so speak with your state agency or a representative from NGI Group for information on which employees you must cover.

There are professions that are sometimes exempt from workers' compensation coverage. These professions include farm laborers and domestic workers.

What are Arizona's State Requirements For Workers' Compensation?

State government sets workers' compensation requirements; in your case, that's the state of Arizona. State requirements can vary dramatically by state. If you have questions about Arizona's state requirements, you should call Arizona's insurance commissioner at (800) 325-2548.

Why Might a Private Insurance Company Not Want to Write my Workers' Compensation Policy?

Although you must have workers' compensation coverage, private insurance companies are under no obligation to sell it to you. They each have their own underwriting guidelines and regularly reject business. Rejection usually occurs for one of three reasons:

• High risk - Some industries, such as construction, roofing and window washing, are considered high hazard. The higher the hazard, the greater the potential for costly claims.
• High claims history - Companies that have a history of high workers' compensation claims activity will find it difficult to find insurance from private companies. Insurers maintain that this level of claims indicates a lack of attention to safety.
• Small size - Start-ups and many small businesses find themselves being rejected because they are either too new or too small. Insurers maintain that these companies are difficult to insure and they can't make a profit from small policies.

How Do I Get Workers' Compensation?

As in most states, Arizona employers typically buy their workers' compensation insurance from private insurance services, like GuardPartners from NGI Group. To get a quote on your workers' compensation needs, visit our Arizona Workers' Compensation Quote tool.

How Will my Workers' Compensation Costs be Determined?

There are three primary factors that will determine your workers' compensation premium:

• Location - As stated previously, every state has different regulations. By virtue of your Arizona location, you'll pay a different premium than a comparable business based in another state. In addition, higher weekly benefits yield higher premium rates.
• Classification - Arizona uses a classification system developed by the National Council on Compensation Insurance that lists more than 600 different types of businesses - you'll see some of those different types reflected in the GuardPartners Quote Tool. Each business classification has its own premium rate stated in dollars per $100 of gross payroll. When a business type has a high potential for hazard, the premium paid is higher As a result, it's very important that when you request an Arizona workers' compensation quote that you classify your business properly. If you misclassify your business, you could end up paying a higher workers' compensation premium than you're obligated to!
• Experience rating - If you have paid more than $5,000 in annual workers' compensation premium, your rates will be affected by your business's claims history. GuardPartners and other insurance companies use what is known as an "experience rating" or "experience modifier" (e-mod). This rating compares the claims history for your company to that of other companies in your industry classification. The higher your number of claims, the higher your workers' compensation premium could be.

If my Company Cannot get Workers' Compensation Coverage from a Private Insurer, Where do I go?

Every state has a mechanism for providing workers' compensation insurance for companies that can't get it elsewhere. In most areas, it comes in the form of an "assigned risk pool" that acts as the workers' compensation insurer of last resort.

If you use the assigned risk pool, you must apply for coverage with the state agency that administers workers' compensation. Applications are then assigned to an insurance company that agrees to do business with the assigned risk pool.

You do not want to be in the assigned risk pool if you can avoid it. Assigned risk plans almost always cost more than private insurance, and you will probably receive poorer service and less attention.

How Do I Get Workers' Compensation Coverage From NGI Group and GUARD Insurance Group?

Use the GuardPartners Arizona Workers Comp Quote Tool, or call NGI Group now at 1-877-290-8180.