Workers’ Comp Insurance in Minnesota

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Why Do You Need Worker’s Comp?

You need Minnesota Workers’ Comp Insurance to comply with Minnesota law and to protect your business’ employees. Minnesota uses a no-fault system that guarantees lost wages and medical care for workers that get hurt or sick in the course of their employment. In Minnesota, every employer with one or more full or part-time employees must have workers comp coverage unless the business or the employee is exempt.

The law is the exclusive remedy for workplace injury and illness. The employees give up their rights to sue for damages in exchange for the guaranteed benefits. Every day on the job involves some risk of accident or injury; employees need the security of insurance. They need to know that if they are injured at work, they and their families will have the help they need.

Buying Workers’ Compensation in Minnesota

You must decide whether to purchase insurance or provide self-insurance. If you can do neither, then you can get insurance in the assigned risk pool.

Private Insurance

You can get help with the search for the best coverage and prices. You can contact an authorized insurance agent, insurance agency, broker, or brokerage house to get the advantage of their knowledge and expertise.

Self-insurance

Minnesota law sets standards for financial fitness to self-insure based on net worth. The state reviews five years of audited annual statements. Firms must file security deposits in the form of irrevocable bank letters of credit. Depending on the retention level chosen, they must reinsure for $ 500,000, $1,000,000 or $2,000,000.

Group Self-insurance

Minnesota law permits employers to form groups to cover the liability of the entire group. The State Department of Insurance must approve the group plan and confirm the assets in place to cover the group liability. Approval is also required when the group ads new members. Group members pay an agreed amount to the group as premiums. The group covers liabilities, and if there were a shortfall, then every member would be assessed for the shortfall.

Assigned Risk pool

New companies, employers with a record above-average number of claims may have trouble getting insured in the open market. They may lack financial reserves sufficient to get approval for self-insurance. Firms that fit this situation can get coverage in the assigned risk pool. The Minnesota Workers’ Compensation Insurers’ Association is the assigned risk system for Minnesota; every employer can get coverage there. The Minnesota Workers’ Compensation Assigned Risk Plan covers employers that cannot get coverage elsewhere in the state.

Instructions for Buying

The first step is to attempt to purchase insurance on the voluntary market. This market consists of companies licensed in the state of Minnesota to sell workers compensation coverage that meets the requirements of state law. The Minnesota Department of Commerce maintains a directory.

You can use the experience of a licensed insurance agent, or broker to find the right combination of price and coverage to meet your needs.

What You Should Know About Worker’s Comp in Minnesota

Fines

The department can fine an uninsured employer whether an injury or not and pay a penalty of up to $1,000 per employee per week of no insurance. The department can issue cease and desist orders and prevent the employer from employing any persons until the employer complies.

If an employee of an uninsured employer gets injured or ill, then the state will order compensation from the special compensation fund. The uninsured employer will have to reimburse the special compensation fund plus a penalty of 65 percent of the reimbursement.

Is Your Business Required To Carry?

Minnesota law does not specify a limit for coverage; therefore any employer with one or more full or part-time workers must get coverage. The coverage options are to purchase insurance, or qualify to self-insure. The definition of employees include minors, immigrants, domestic workers ( with enough hours per quarter), casual labor, and non-citizens. The basic exemptions involve business owners a listed below.

  • Sole proprietors
  • Officers of closely held corporations
  • Shareholders in S-Corporations
  • Managers in LLC’s

Where to Buy Insurance?

You should buy on the open market and use an agent if you are not familiar with the market. You can apply for self-insurance or to a self-insured group. If you cannot self-insure, or get coverage on the private market, then you can get coverage in the assigned risk pool(MWCARP).

How Much Does Worker’s Comp Insurance Cost?

The employers record of safety and claims determine the price of insurance. The basic rates are standard, but the employer’s risk rating or MOD adds to the costs. Many insurers offer discount rates to employers that agree to implement an approved safety program.

What Is the Cost of Not Getting Worker’s Comp Insurance?

Minnesota government imposes penalties on uninsured employers; uninsured employers must pay the medical expenses and the portion of lost wages the worker would have received if insured. The liability goes to the company, its owners, and its officers. The willful failure to get and keep workers compensation insurance is a gross misdemeanor under Minnesota criminal law.

Factors That Impact Coverage

Legal

There can be confusing factors when trying to decide if a worker is an employee or contractor. The consequences can be severe if the one you treated as a contractor is determined to be an employee. It is always good to check if there are concerns.

Liability

Prime contractors can be held liable for injuries, and lack of coverage for employees brought to the job by a subcontractor. Prime contractors must verify that subcontractors have coverage and that every employee has coverage.

Rates

The employer’s rates depend on two dominant factors; rates are most influenced by the types of occupations it uses and the specific history of claims. Rates can go down from periods low or no claims, and employers can earn discounts by applying vigorous safety programs.

Other Helpful Tips

Minnesota has a strict workers compensation insurance law; the penalties for noncompliance are severe. They include civil penalties, civil fines, and criminal charges for willful violations. It is particularly important to distinguish between contractors and employees for coverage purposes. When in doubt, you should consult with the State Department of Insurance for contractor issues and with the Department of Labor for employee exemptions.

Conclusion

The Minnesota government offers many convenient ways to get into compliance with Minnesota Workers’ Comp Insurance requirements. Minnesota Workers’ Comp is a strict system and employers must be certain to follow the rules, orders, and instructions. Non-compliant employers face potentially costly fines and penalties and personal liability.

Sources:

  • Minnesota Department of Labor and Industry
    http://www.dli.mn.gov/workcomp.asp