Since workers’ compensation insurance is required in nearly every state, you should verify that the entities you do business with are covered, especially if you hire independent contractors and subcontractors.
You should verify that a business partner has a workers’ comp policy to protect your business from a potential claim. Verification can also help you avoid an increase in your workers’ comp premium. If you use an uninsured company, your premium may go up after the final audit of your policy, since the money you’ve paid another company will appear on your policy as payroll.
Most states have their own online verification systems. Your state’s system may be accessed through its Department of Labor or Department of Insurance website. For example, workers’ comp verification in Florida is a service of the state’s Division of Workers’ Compensation. There also are nationwide verification databases, including the National Council on Compensation Insurance (NCCI) and Workers Compensation Consultants. A national database can be helpful if you partner with companies in other states.
The information you’ll need to verify coverage varies between states. However, in most cases, you’ll need the company’s:
With this information, you should be able to learn the name of the business’s insurer and the date that a policy was written. Some verification services will provide you with the insurance history of an employer, which can make it easier to determine which company provided coverage if a claim occurs.
A few caveats: The data on verification sites—particularly state sites—may not be up to date. You may want to double-check a businesses’ coverage directly with its insurer. Also, just because a business doesn’t appear in a directory doesn’t mean that it’s not covered. They may not have reported coverage to the database, or it may be covered under a different business name. And, self-insured employers may not appear in a verification database. Your best option is to ask a business partner to verify workers’ compensation coverage, then call the insurer to confirm coverage details.
Remember, every situation is different and state workers’ compensation laws are subject to change, so be sure to do your research and speak with a trusted advisor.
Thanks for reading! Please note that this content is intended for educational purposes only. As laws change regularly, you should refer to your state legislation and/or an advisor for specific legal counsel. If you’re a small business owner, learn more about workers’ compensation insurance or check your current rate in 3 minutes.
