The state of Wisconsin requires business owners to purchase a workers’ compensation insurance policy to cover workers who are injured or made ill due to a workplace exposure. Business owners and corporate officers have the option to exclude themselves from coverage and avoid having their payroll rated on a workers compensation policy, however, there are potential drawbacks to opting out that need to be seriously considered before you make your decision.
Executive officers of a corporation are usually included for coverage in Wisconsin’s workers’ compensation laws unless they file for an exclusion from the policy. Partners and sole proprietors are generally exempt from coverage but may elect coverage under the policy.
Benefits of Workers’ Compensation Insurance
The benefits are the same for everyone covered under a commercial workers’ compensation policy, including officers. Workers’ compensation coverage pays benefits to workers injured on the job. These benefits include medical care, a portion of lost wages and permanent disability. It also provides death benefits to dependents of employees killed from a work-related accident. A typical health insurance policy specifically excludes work-related injuries unless there is a rider attached to the policy that adds business coverage. Furthermore, health insurance does not cover disability the same way that workers’ compensation insurance does.
Why Would Someone Opt Out of Workers’ Compensation Insurance?
Wiscsonsin small business owners often make the following assumptions when opting out of workers’ compensation insurance:
- They assume that their medical insurance is enough to cover them in the event of an injury incurred at the workplace.
- They assume that they would never want to file a workers’ compensation claim against their own company, so they don’t see the need to pay premiums for a policy that they
won’t use. - They didn’t realize that they opted out
Should You Opt Out of Work Comp?
Even if the business owner spends the majority of his or her time at a desk, there is still a risk of injury. And if an injury occurs, it’s likely that the business owner’s health insurance policy will have an exclusion for work-related injuries. Without workers’ compensation insurance, the cost of treatment for those injuries would have to be paid for by the company, or come out of the pocket of the owner. Excluding yourself from workers’ compensation insurance will definitely save some money on your commercial insurance costs, but it also transfers risk to the employer and to the corporate officer who chooses to opt out.
If an owner rejects/opts out of coverage, he or she will most likely have to file a document with the Wisconsin Compensation Rating Bureau and the insurance provider prior to obtaining insurance coverage.
Consult NS Insurance today if you have any questions or need help deciding whether or not opting out of workers’ compensation insurance is right for you and your business.
Nate Stymiest
Commercial Insurance & Work Comp Advisor
Nine years business insurance experience helping business owners in Wisconsin
Owner of NS Insurance
