Include/Exclude Option on Work Comp

As the Owner of a business, you have the option under the Workers Compensation Laws to either include or exclude your payroll from your policy.  So, the first question you would ask is “Why would I want to pay for work comp insurance on myself when I would never file a claim?” Besides, you have health insurance, right?

The Owner of a small business often finds they become the installer, delivery driver, salesperson, receptionist, etc. 

Consider this:

You have a large job to finish and your best worker is out sick for the day.  You decide that you will have to throw on some boots and do it yourself.  You get to the job site and climb the ladder to start the job.  For some reason, the ladder becomes unstable and you fall 15 feet to the cement below breaking your arm and causing a serious head injury.  3 months earlier, you decided that it would be better to exclude yourself from work comp coverage because you hate the fact that you are required to purchase this to do business and you want to pay as little as possible for it.  Suddenly, we have a very serious situation to address.  Will your health insurance take care of your hospital bills, medication, rehab?  Maybe.  But it isn’t very likely as most health insurers specifically exclude work-related injuries.  NEVER ASSUME THAT YOUR HEALTH INSURANCE WILL COVER THIS!! 

I highly recommend that all Owners, Officers, Partners, or Members of a company include their payroll on Workers Compensation Insurance.

Here is the breakdown in Utah:

LLC Members, Partners, and Sole Proprietors: Are automatically excluded from the workers compensation coverage, but by written request may elect to be included. Each member, partner, and or sole proprietor that elects coverage will be rated on a stated amount of $39,000 in payroll regardless of the amount of money paid to them by the company (Utah stated payroll effective 12/01/2010).


Officers of a Corporation: Are automatically included in the workers compensation coverage, but by written request may elect to be excluded. Each officer that does not opt out of coverage is subject to a minimum payroll of $39,000 up to a maximum payroll $159,000 per officer (Utah stated payroll effective 12/01/2010). Each officer's payroll that falls in between is subject to their actual payroll.

If you decide to Exclude yourself from Work Comp coverage then there are other options to make sure you are protected in the event of an accident which MIGHT include a rider on your health insurance policy, a long-term disability policy, a life insurance policy, etc.

The safe thing to do is to add that little extra payroll into your Workers Compensation coverage as you never know from day to day which hat you will be wearing to work.  Contrary to somewhat popular belief, the work comp system is a great way to protect owners and employees from accidents in the workplace that affect them and their families.  If you have any questions or would like to discuss this in more detail please contact me.  BE SAFE OUT THERE!