Buying Workers’ Comp Insurance in Vermont

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Why You Need Workers’ Comp

Workers’ Compensation is a no-fault system that provides a right to immediate medical care and compensation for lost wages. Workers’ comp laws protect employers and employees in the event of a workplace or work-related accident, injury, or illness. You need workers’ compensation to protect your employees and their families, and you need the insurance to protect your business and personal assets.

The law represents a balance to benefit businesses and workers. Workers give up their right to sue and get a guarantee of compensation for lost wages and immediate medical care. Employers protect their interest in a healthy workforce and get protection from legal actions to recover for negligence, injury, or wrongful death.

Buying workers' compensation in Vermont

Businesses in Vermont can get insurance coverage in four ways.

Businesses can buy insurance on the voluntary market from licensed insurance providers. The voluntary market is the best place to buy insurance. You can get discounts based on your claims history, or Mod, the quality of your safety programs, and your professional or business affiliations.

If qualified, businesses can self-insure for workers’ compensation with approval and oversight from the State of Vermont government. The Department of Labor must review and approve an application for self-insurance. The employer must meet state requirements for assets, profitability, and cash flow. Further, the employer must post bonds and a guarantee for excess liability.

Businesses can buy insurance through the assigned risk process by a direct assignment through the NCCI. The direct assignment is a program aimed at small businesses who are taken out of the pool by an insurer who gets a credit for the transaction in order to supplement the fee.

Businesses can purchase coverage in the assigned pool by random assignment through the NCCI.

Instructions for buying

The best way to begin is to contact one or more authorized workers’ comp insurance companies. They make it their business to know the products on the marketplace. They can help find excellent matches for your business needs and budget preference. Some firms fail to get coverage on the voluntary market; typically, denials go to new firms, firms with poor safety records, and firms that have a high rate of claims or dangerous occupations.

Firms that cannot find open market quotes can get coverage in the high-risk pool by contacting and making an application through the NCCI.

What you should know about workers' comp in Vermont The Vermont workers’ comp laws have exemptions for some classes or types of workers including the below-listed categories.

  • Casual employees if their work is not for the purposes of the employer’s main business or trade.
  • Persons working in agricultural or farm jobs for employers with an annual payroll of $10,000 or less.
  • Persons engaged in amateur sports competition.
  • Elected officials (most but not all)
  • Volunteers

Is your business required to carry?

In Vermont, every employer with one or more full-time or part-time employees must have workers’ compensation insurance. The major exemptions are for casual labor and family farming. Proprietors, business owners, and shareholder corporation officers or owners are exempt from the mandatory coverage requirement. Members of these exempted groups can opt in for coverage, and for many people, it is an excellent investment for additional protection from injury or illness.

Where to buy insurance?

The commercial insurance market is the first place to get insurance. Those that fail to get commercial coverage can either self-insure with government approval or buy through the Vermont assigned risk pool at the NCCI.

How much does workers' comp insurance cost?

For comparison, the 2015 annual average across all occupational classes and employers was $1.84 per $100 in payroll. This ratio places Vermont in the lower third of all states in terms of costs of insurance.

What is the cost of not getting workers' comp insurance?

If a worker gets injured while in your employ and you do not have insurance, then you will have civil liability and possibly criminal liability. First of all, an injured employee can sue for damages. The government-imposed penalties in Vermont are stiff. Civil penalties range from $5,000 for failing to follow DOL rules and orders, and the law allows fines up to $20,000 by the Department of Financial Regulation for fraud and misconduct. Criminal penalties including misdemeanors and jail time follow severe violations and those involving severe injury or death.

Factors that impact coverage

State governments create workers’ compensation laws, and each state has an approach developed by its traditions, voters, and experiences.

  • 1

    Legal

    The ratio of costs to payroll are lower today than at any time in more than 25 years. One state court (Florida) ruled that the compensation rates were too low to carry out the purposes of the law, namely, to fairly compensate and protect employees when injured. If the compensation is too low, then the bargain of giving up the right to sue fails.

    Courts may follow the Florida precedent and permit lawsuits in serious injury cases. States must review and revise their laws, and Vermont is a state with a substantial natural resources industry, which has higher risks of injury than most classifications.

  • 2

    Liability

    As a business owner, prime contractor or another business capacity, you must be sure that any contractors or subcontractors that you engage have workers’ comp coverage. An injured worker of an uninsured contractor or subcontractor can hold you liable. The law in Vermont does not excuse the prime contractor or owner if it hires an independent contractor without insurance. This rule applies if the contractor is uninsured or fails to meet the standard for an independent contractor.

  • 3

    Rates

    Rates depend on occupational classifications and the employer’s particular history of workplace safety, injuries, and claims. Occupations in construction, natural resources (mining, extraction, lumber), and maintenance work require much higher rates than other types of classifications such as receptionists, sales personnel, and librarians. The high rate group accounts for a much as three (3.0) percent of total compensation costs while the low-risk group accounts for less than 1(0.9) percent.

    List of places you can get more info about workers’ comp in Vermont

    • The Vermont Department of Labor (802) 828-2286. The VDOL is the regulatory agency for workers’ comp administration. They can answer questions and direct employers to resources.
    • NCCI (the National Council of Compensation Insurance)is the official rating agency to determine basic rates for each job classification; the NCCI operates the Vermont Assigned Risk Pool. Call NCCI at 800-NCCI-123 (800-622-4123).
    • The Department of Financial Regulation, Workers’ Comp Department In Vermont, the government offers advice and assistance to businesses needing help or information in getting workers’ comp coverage.

Other tips

In Vermont, an employer can cover a relative or other close relationship. They can cover them whether they live separate and apart or with the employer. Sole proprietors and partners or owners of shareholder corporations can choose to get coverage.

Workers hired outside of Vermont but that perform work within Vermont boundaries must have workers’ compensation coverage. You should check to determine whether Vermont recognizes the coverage laws of the state in which the hires occurred. Vermont employers will be liable under Vermont law unless, and until, the state agrees to accept foreign coverage.

Conclusion

Vermont relies upon private insurers to provide the legally required coverage. The law applies to nearly every employer and the great majority of employees. Vermont is an aggressive state on the enforcement of workers’ comp protections for workers. It updates its procedures with the latest medical standards for determining benefits, disability ratings, and the duration of medical care.

Sources:

  • Vermont Department of Labor, Workers’ Compensation
    http://labor.vermont.gov/workers-compensation/

  • Vermont Business Owner’s Guide to Workers’ Compensation Insurance
    http://www.dfr.vermont.gov/insurance/insurance-consumer/vermont-business-owners-guide-workers-compensation-insurance

  • NASI, National Academy of Social Insurance, Report: Workers’ Comp Benefits, Coverage, and Costs, at Table 14- 2015 data.
    https://www.nasi.org/sites/default/files/research/NASI_Workers%20Comp%20Report%202017_web.pdf

  • The National Council on Compensation Insurance(NCCI)
    https://www.ncci.com/Articles/Pages/DR_StateReferenceGuideState_VT.aspx