Workers’ Comp Insurance in New Jersey

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Why Do You Need Workers’ comp?

You need New Jersey Workers’ Comp Insurance to protect your employees and your business. Workers’ compensation is a no-fault system that provides medical care and temporary or permanent disability income to employees that get sick or injured in the course of their employment. In the event of fatalities, workers comp provides benefits for families of deceased workers.

The system protects employers by limiting lawsuits for damages when workers get hurt. Workers give up the right to sue in exchange for guarantees of immediate medical and financial help.

Buying Workers’ Compensation in New Jersey

New Jersey offers three options for getting insurance coverage. You can buy on the commercial insurance market and pick the best price and value for your needs. You can apply for permission to self-insure. If you cannot buy coverage because the private market does not accept your applications, then you can get covered through the New Jersey Workers’ Compensation Insurance Plan.

Instructions for Buying

There are some basic pieces of information that you should collect before shopping for New Jersey Workers’ Comp Insurance. You should start with options for purchase on the open market. If you cannot get coverage for commercial carriers, then you will get covered through the assigned risk pool.

You should have the below-listed items.

  • Your modified experience rating
  • Copy of the current or latest workers’ comp insurance policy
  • The occupation classes that your company uses.

What You Should Know About Workers’ comp In New Jersey

Employers can be charged with unfair or unethical conduct in handling complaints and claims. The law specifically forbids discrimination, unfair treatment, or any adverse action against an employee that files or attempts to file a claim for compensation. This rule protects injured employees or employees that may be involved as witnesses. The Division of Workers Compensation investigates claims of discrimination.

Is Your Business Required to Carry?

Corporations must have insurance if any person, including one or more of the corporation’s officers, performs services for present or potential future economic consideration. Corporations must purchase insurance or get approval to self-insure.

Partnerships and Limited Liability Companies must get coverage or apply for self-insurance as long as any person other than a partner or shareholder performs services for present or future economic value.

Sole Proprietors operating in New Jersey must have insurance coverage under certain conditions. They must cover if any person other than the principal owner performs services for present or future economic value.

Where to Buy Insurance?

  • 1

    The Open Market

    The State of New Jersey currently licenses more than 400 insurance companies to provide workers’ comp coverage. These include brokers and agents with extensive knowledge of the market and available products. If you do not know the field or the market, then you can use brokers or agents to help find the best options for your needs and preferences.

  • 2

    Self-Insurance

    Well-established companies with large amounts of assets can apply for approval to self-insure and manage their own workers’ comp program. The company must clearly demonstrate financial capacity to cover the full liability, and provide excess liability insurance. The state requires a security deposit or bonding arrangement. Once approved, the self-insured company may contract with an approved third-party managed care company for all or part of the program administration

  • 3

    The Assigned Risk Pool

    The New Jersey Workers’ Compensation Insurance Plan is the state’s assigned risk pool. The Compensation Rating and Inspection Bureau administers the pool and accepts applications for coverage through an assigned insurance carrier. Employers that cannot find coverage on the open market can buy coverage through the New Jersey Workers’ Compensation Insurance Plan.

How Much Does Workers’ comp Insurance Cost?

Rates depend on the occupations used by the employer and the modified experience rating. The state’s rate-setting agency is the New Jersey Compensation Rating and Inspection Bureau, and this agency also sets occupational classifications.

What Is the Cost of Not Getting Workers’ compInsurance?

The state regularly compares its employer records with the register at the Compensation Rating and Inspection Bureau (NJCRIB) on a regular basis; it is the official record of workers’ comp insured companies. The database suggests employers that may not have insurance. The state automatically notifies them and demands a proof of insurance.

An uninsured employer faces severe civil penalties, personal liability, and criminal charges. The failure to insure is a criminal offense. Civil penalties for no-insurance can be as high as $5,000 per day for the initial 10-day period, and $5,000 for each additional uninsured 10-day period thereafter. Officers of corporations that fail to insure face personal civil and individual criminal liability.

Factors That Impact Coverage

  • Legal

    New Jersey has a complex definition of employee and employment. It is more extensive than other standards like the IRS Code. In New Jersey, the employer-employee relationship exists if either of the below-described statements is true.

    • Does it meet the Control test? A relationship meets the control test if the business controls what the employee does and how it is done.
    • Does it meet the “relative nature of the work test,”? An employer-employee relationship exists if the employee depends on the business for income, and if the work performed is an important part of the business’ activities.

  • Liability

    Out of state companies may need to get NJ coverage when they work in the state for extended periods. You should check with the division of workers’ compensation to determine the best course.

  • Rates

    The designated agency sets the basic rates using information from businesses and industries of every kind. The NCCI defines the occupational classifications, and it sets the basic rates. Insurers can raise or lower the rates depending on the modified experience rating. A rating of 1.0 is neutral and won’t change the basic rate. Ratings above 1.0 will raise the premium and ratings below will lower the premium.

Other Helpful Tips

Prevention is the best cure for workplace injuries and the best way to reduce costs of workers’ compensation insurance. The state of New Jersey Government offers assistance in identifying areas for improvement. The New Jersey Department of Labor and Workforce Development’s free On-Site Consultation Service can help you pinpoint areas for special care and attention in your safety program.

Conclusion

New Jersey Workers’ Comp Insurance carries out a policy aimed at protecting injured and ill workers, and the program has a strong focus on safety and prevention. The system protects workers economic and individual rights with vigorous enforcement of employment discrimination complaints. Employers that do not comply with the rules face criminal charges for willful refusal, and severe civil penalties including personal liability.

Sources:

  • Employer’s Guide to Workers’ compensation
    http://lwd.dol.state.nj.us/labor/forms_pdfs/wc/pdf/WC-373.pdf

  • The Division of Workers’ compensation Web site
    http://nj.gov/labor/wc/