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Claim , Contractors

Navigating Claims in Short-Term Workers’ Comp: A Step-by-Step Guide

Workers’ compensation is an essential part of your business. Whether you have one employee or hundreds, it’s a good idea to have workers’ comp insurance in place in case someone gets injured on the job. No matter how careful your employees are or how safe of a work environment you’ve created, accidents happen every day, and it’s best to be prepared if they do.


Despite the importance of workers’ compensation for your business, it can be expensive. It may be helpful to go into it with an idea in mind of what that cost will be. Because many factors contribute to the cost of workers’ compensation premiums, actually calculating it can be complex. Let’s dive into what workers’ compensation includes, how to estimate premiums, and what some options are when it comes to coverage.

What to expect from workers’ compensation insurance

Workers’ compensation insurance is crucial for financially protecting your employees and your business if someone gets injured on the job or becomes ill as a direct result of their work. Though it’s legally required in most states, the rules and regulations do vary state by state. In some areas, having just one employee means workers’ comp is a requirement, while in others there’s a little more leniency. In some states, the industry or type of job can also play a role in the regulations.


Typically, after an injury, workers’ compensation covers medical expenses and additional care like rehabilitation costs. If the accident results in a permanent injury preventing the employee from going back to the workforce, workers’ comp can provide benefits to help support them. Workers’ compensation can also help support the employee’s family in the event they pass away from their injury.

Estimating your workers’ comp premiums

There are many factors that contribute to workers’ compensation premiums. First and foremost, the industry and nature of work determines the classification rate of each employee. Employees who’s work involves more risk—such as construction workers or anyone who uses heavy machinery—will likely have a higher rate someone who works in an office or performs more administrative tasks.


Workers’ comp premiums are also based off of the estimated annual payroll. If the payroll at the end of the year is higher than anticipated, the employer will have to pay the difference. If it’s lower, insurance companies will issue a refund for the difference. Though it’s nearly impossible to know exactly what your payroll will be, it’s a good idea to strive for accuracy. Keep in mind that insurance companies often audit businesses to ensure their payroll is correct.


The claims history of your company also plays a role in calculating the premium. In most cases, the better your track record, the more affordable your workers’ compensation premiums will be. The more claims you file, the more likely your premiums will be to increase.

Looking for other workers’ compensation options?

If you’re looking for another avenue when it comes to workers’ compensation, it’s important to note that there are more options available than simply traditional plans. PEOs or professional employer organizations often offer programs more suited for small to mid-sized businesses or companies who have short-term workers. Pay-as-you-go programs are a great way to get the coverage you need while also paying only for what you use.

Though it’s difficult to calculate workers’ compensation premiums completely accurately, having rough estimates of the data needed can help you get a better idea of what to expect. Tak your time considering what makes the most sense for your company and make your decision from there.