Why You Need Workers’ Comp?
You need workers comp insurance to protect your valuable workforce and to protect your personal and business assets. Louisiana workers’ compensation is a no-fault system designed to cover injured workers with employer-paid benefits.
The system limits employer exposure to civil lawsuits; it immediately pays medical costs and provides financial benefits for injury or illness arising out of employment. The worker gives up his or her right to sue in exchange for the guarantee of income and medical expenses.
Buying Workers’ Compensation in Louisiana
Louisiana offers three ways to get and keep workers compensation insurance coverage that meets the requirements of the state’s laws. You can buy on the open market, self-insure, or buy in the assigned risk pool.
Instructions for Buying
You can contact any licensed insurance agent or broker through are site to assist in your search for the best price and coverage to meet your needs. You should gather the below-listed information in advance.
- The number of employees
- The number of employees by NCCI occupational classification
- Your Mod rating or claims history rating
- Your last workers’ comp insurance policy, if any
The Louisiana Workers Compensation Corporation
You can buy insurance from a licensed insurance provider or through a licensed insurance agency, agent, or broker. As an alternative to the open market, you can buy insurance from the Louisiana Workers Compensation Corporation. This private mutual insurance corporation competes with other private insurance providers, and it offers a comprehensive range of services. You can get competitively priced coverage that includes legal support, fraud detection, a medical care network, and claims adjustment services.
What You Should Know About Workers’ Comp in Louisiana
The LWCC is a private sector company that competes with other providers of workers’ comp coverage. It is also the administrator for the assigned risk pool in Louisiana.
The state can seek court orders to stop operations at companies that fall out of compliance with workers’ comp rules and coverage. The state can prevent companies from conducting further business until they satisfy the requirements of the law.
Is Your Business Required to Carry?
Nearly every employer in Louisiana must carry workers’ comp insurance because it applies to anyone with one or more full-time or part-time employees. The below-listed exemptions do not require coverage.
- volunteer workers
- domestic employees
- most real estate salespersons
- uncompensated officers and directors of certain non-profit organizations
- public officials
Where to Buy Insurance?
You can self-insure in Louisiana, buy on the open market, or accept an assignment of a carrier through the assigned risk pool.
In Louisiana, the best place to buy is the private market or voluntary market. You can buy from the LWCC as a private seller or as administrator of the assigned risk pool. You can develop a self-insurance plan and present it to the department of insurance for approval.
Self-insurance requires a detailed presentation and government approval. You must cover claims administration by a third party or internal functions, and excess liability insurance. You will have to present three years of audited financial statements and security deposit performance guarantees.
The assigned risk pool operated by the LWCC will provide coverage for employers. The rates will likely be higher than market rates but in full compliance with the legal requirements for Louisiana employers.
How Much Does Workers’ Comp Insurance Cost?
For a recent year in which rates for all occupations were available, Louisiana had an average of $1.61 per $100 of payroll. This rate put Louisiana in the lower one-third of all state averages. The rate you will pay as an employer today depends on the occupations your business uses and your MOD or history of claims.
The designated state agency (the NCCI) sets the basic rate per occupation. Insurers adjust that basic rate upward in relation to their conclusions about your risk factors.
What Is the Cost of Not Getting Workers’ Comp Insurance?
The costs of not getting insurance are threefold. First, the state will impose fines and penalties on uninsured or under-insured employers. The state has the power to issue stop work orders to enforce compliance. Second, your employees and their families may suffer without financial aid and medical care in the event of an injury or illness. Third, you will have exposure to civil liability for failing to insure the worker and for the economic and other damages.
Factors That Impact Coverage
Employers must ensure that employees are covered or are clearly exempt from requirements such as independent contractors. The state government and your insurance carrier offer assistance when in doubt concerning an employee status.
The state of Louisiana imposes strict adherence to requirements for coverage and applies severe penalties for employers that willfully evade their obligations. Leased employee arrangements are lawful, but they do not relieve the employer of responsibility for required workers’ compensation insurance. The employer must ensure that a leased employee arrangement covers workers’ comp.
Prime contractors and general contractors that engage subcontractors have ultimate responsibility for the subcontractor employees. Prime contractors must ensure that all employees of subcontractors have workers’ comp coverage. If a sub fails to cover its employees, then the Prime shall be liable for premiums and penalties.
You should remember that workers’ comp insurance does not replace the need for a safety program in your business. Workers’ comp rates will go down if you have a great safety program, and if you have few or no claims.
You should also remember that workers’ comp does not replace liability coverage for persons that are not employees such as visitors and customers. You still need to address premises liability and other ways you need to protect your business and personal assets.
Your rates combine the claims history for your business with the ratings for the occupations that you use. The state of Louisiana designated the National Council of Compensation Insurance (NCCI) as the standards agency for classification and workers compensation basic rates. Other factors include the size of the annual payroll and normal commercial ratings that reflect business size and stability.
Other Helpful Tips
Louisiana has harsh fines and penalties for uninsured employers. The law authorizes civil and criminal remedies for violations and failure to insure.
An employer that fails to carry workers’ comp insurance coverage faces a civil fine of up to $250 per employee. For second or subsequent violations, the State can enhance the penalty to up to $500 per employee. The fines have an overall limit of $10,000.00.
The state can pursue criminal penalties for a willful failure to provide insurance, for giving false information concerning a workers’ coverage, and for giving false information to avoid paying the due amount of insurance premiums.
The state of Louisiana has risen from near bankruptcy in nearly all of its governmental functions due to new government leadership and fresh views on old problems. The state funds for uninsured worker coverage as well as the assigned risk pool are solid and functioning well in service of the business community, employees, and their families.
The state offers assistance to employers to locate and get workers comp insurance coverage that meets or exceeds the requirements of the law. The state actively promotes workplace safety as a means of preventing claims and injuries.
- The Louisiana Workers Compensation Corporation