Workers’ Comp Insurance in Missouri

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Why You Need Workers’ Comp

Missouri Workers’ Comp Insurance protects employers and workers through a no-fault system for medical benefits and lost wages. Employees give up their right to sue, and employers guarantee immediate medical benefits and an agreed percentage of weekly wages.

Workers comp protects employers from lawsuits by injured or sick employees. The system promotes workplace safety with incentives on all sides to reduce job-related accidents, injuries, and illness.

Buying Workers’ Compensation in Missouri

Missouri offers private, and government assisted methods for buying qualified coverage. You can search the open market among licensed providers of workers’ compensation coverage. If you cannot qualify for private insurance, then you can get coverage in the state assisted assigned risk pool. You can self-insure by meeting rigorous financial and management requirements, or join a self-insured group.

Instructions for Buying

You can check with the Missouri Division of Workers Compensation to be sure that you are required to get coverage. You must decide whether to purchase coverage or self-insure. You can also get a list of licensed providers. Many companies use agents or brokers to arrange quotes and contracts. If you get quotes for coverage, then you can decide whether to buy or self-insure.

What You Should Know About Workers’ Comp in Missouri

Missouri has a progressive stance on worker benefits and rehabilitation. They added the Second Injury Fund to the range of benefits that can help workers in complex cases. The Second Injury Fund is a program to assist workers and their families when a second injury combines with the effects of a prior injury to create a severe situation.

The second injury fund gets monies from a surcharge on workers compensation premiums. The tax collection comes directly from every insurer that writes policies in Missouri, and it comes from assessments on individual and group self-insured companies.

Is Your Business Required to Carry?

Missouri has a two-tier approach to workers’ comp; the threshold is different for construction employers. The general rule applies to all other – or non-construction employers. Many small employers volunteer to add coverage because it is to their advantage to do so.

The General Rule

Employers with five or more employees must have workers comp coverage that meets the requirement of Missouri law.

The Construction Rule

If you are in the construction business, then you must have workers comp coverage for one or more employees.

Where to Buy Insurance?

  • 1

    Voluntary Market

    The state of Missouri Department of insurance licenses qualified private insurance companies, agents, and brokers to sell workers compensation insurance. These sellers use underwriting to assess the suitability of the applicant and the risk level. Many new companies, recently expanded companies, or high-risk applicants will not get offers. They will have to find coverage in self-insurance or assigned coverage carriers.

  • 2

    Self-Insurance

    Missouri has a sophisticated set of rules and procedures for self-insurance. It has a specific set of requirements for business size and financial stability. The advice consistently advises the applicant of the extensive requirements that come with self-insurance. They include compensation administration, claims adjustment, payments, disputes resolution, and financial management.

    Safety is a major component of workers comp administration in Missouri, and the self-insured company must undertake a vigorous program of education and practical steps to promote safety. The Department of Insurance must approve applications, and it maintains close oversight including periodic audits.

  • 3

    Group Self-insurance

    The laws of Missouri authorize self-insured trusts to retain the risk of a group of employers and cover them with combined assets. The law encourages businesses of similar size and with an association or other affiliations to work together for worker security and to promote safety. Many of the group trust self-insured plans revolve around business groups and trade associations.

  • 4

    Assigned Risk Pool

    The Missouri Workers’ Compensation Assigned Risk Pool is the Missouri Workers’ Compensation Insurance Plan. The plan has private provider administration by a contract carrier. The current contractor is the Travelers Property Casualty Company of America.

How Much Does Workers’ Comp Insurance Cost?

In 2014, the estimate for the average of all fees, over all employers, and all classifications was $1.11 per $100 of payroll. The designated state agency sets the basic rate for each industrial class and occupation code. There are additional charges and surcharges on every policy for the Second Injury Fund and the Workers’ Compensation tax.

What Is the Cost of Not Getting Workers’ Comp Insurance?

A significant number of small employers do not have to have workers comp coverage because they have fewer than five employees. These employers may voluntarily cover themselves and their employees to reduce their legal risks and exposure. Employees of an uninsured employer have the right to sue at law in tort and any other remedy that may be available under the circumstances.

Employers that meet the threshold for coverage of five or more employees (or one or more construction employees) violate the law if uninsured. Employers that knowingly fail or refuse to get and keep workers comp coverage face civil penalties, and criminal charges. The maximum civil penalty is the greater of three times the amount of the annual premium or $50,000. The Noncompliance Unit of the Workers’ Compensation Division investigates underinsurance and uninsured employers.

Factors that Impact Coverage

  • Legal

    The state of Missouri imposes criminal sanctions on the failure to get and keep workers comp coverage. A knowing failure to insure is a Missouri Class A misdemeanor. The state can charge a second violation by the employer as a Class E felony.

  • Liability

    Employers that do not carry workers comp protection face liability for injuries and illness arising out of employment. Employers that are not required to have insurance face legal suits based in tort, negligence or some other aspect of the employment relationship. Employers required to have insurance can be sued for failing to have insurance in addition to the other remedies for injury. The uninsured employee can sue to recover workers comp benefits in addition to any other cause against the wrongfully uninsured employer.

  • Rates

    The standard rates depend on the occupational listing from the approved rating service. Missouri uses ratings from the NCCI. Experience Modification or MOD is the added factor that specifically relates the standard rates to your company. The experience mod reflects the claims history of each applicant and compares it to an average for businesses of similar size in the same line of business.

Other Helpful Tips

You can get additional insurance options beyond the private market and the assigned carrier pool by your business or professional affiliations. Trade associations and business associations are among the leading sponsors of group self-insurance trusts in Missouri. The sponsor’s reserve participation in the trusts to members of the business groups or trade associations. Active group self-insurance sponsors include manufacturers, general contractors, home builders, and mechanical contractors.

Conclusion

Missouri Workers’ Comp Insurance applies to a relatively high threshold of five employees. Construction has a separate rule, and the requirement applies to employers with one or more employees. The exempt employers often add the coverage voluntarily; it adds important protections for employees and business owners.

Missouri has an active community of associations and trade groups that use self-insurance trusts as a popular benefit and drawing card for membership. These programs can offer lower costs to employers than the open market. The state emphasizes safety and insurers frequently add discount provisions as incentives for employers to use safety expertise.

Sources:

  • Group Trust Self-Insurance
    https://labor.mo.gov/DWC/Employers/group_trust_self_ins

  • Missouri Penalties for Uninsured Employer
    https://labor.mo.gov/DWC/Injured_Workers/employer_no_insurance

  • The Assigned Risk Pool (WCARP)
    https://insurance.mo.gov/consumers/wc/wcarp.php