If your business has employees, you will need workers’ compensation insurance. You need to insure your employees against on-the-job injuries. Workers’ compensation is a system where the employee is not allowed, by statute, to sue their employer for on-the-job injuries; but, in return, the employer must participate in a system that provides nearly automatic payment to the employee in case of injury for medical bills and damages. There are many options for workers’ compensation coverage.
By law, you will be required to participate in workers’ compensation. There are exceptions, but the exceptions are few. As a general rule, if you are self-employed, you do not need to have workers’ compensation insurance. However, you can “opt in” as a self-employed business person.
When you start in your business your premiums will be based on the claims experience of your particular industry. Claims experience is a historical set of data kept over time which statistically predicts the number of injuries (claims) that are likely to occur in an industry. The roofing business and construction contractors typically have the highest claims experience and workers’ compensation premiums are higher for those businesses. Businesses where there is less chance of injury have lower premiums.
After a few years your business will be rated on its claims experience. Typically this rating process will penalize your business with higher premiums for higher than average claims and reward your business with lower premiums for lower than average claims.