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Wednesday, September 9, 2015

Workers' Compensation in Montana (Part III)

To buy workers' compensation insurance, you need to request a quote from a licensed insurance agent and provide some details about your business.
Here's what to have in front of you:

  • Number of employees in each class code
  • Total payroll for all employees. You may be able to exclude yourself if you don't wish to be covered under the policy.
  • Federal ID Number If you are a sole proprietor, you can use your Social Security Number
  • Copy of your previous workers' comp insurance policy, if you've had coverage or claims in the past few years.

Montana has a private market, meaning that you can purchase workers' compensation insurance from any private insurance carrier or agency that is licensed to write in that state. Montana also has a state fund that competes with the private market. You can contact Montana State Fund if you are unable to secure coverage from a private insurance carrier. State funds accept higher-risk businesses, so their rates are often higher.
If you’re still having trouble, you can contact Montana's assigned risk pool, which will help you find coverage.

Know where your employees will work. Workers’ compensation is regulated on a state-by-state basis and depends on where your employees perform work - not necessarily where the business was founded or is based. Who needs to be covered, where you can buy a policy and how much it will cost all depend are all mandated or influenced by state law.

Make sure your policy is comprehensive. If you’re going to have employees in multiple states, or employees traveling across state lines to work, make sure your policy covers these states as well.

Decide how many employees you plan to hire, and how much you plan to pay them. Workers’ compensation premiums are calculated, in part, by the kinds of work performed. Many businesses have multiple functions performed by different kinds of employees - right now you may just a few people who wear many different hats. It’s important to classify employees accurately - based on what they spend the majority of their time doing - because this could alter your premium dramatically.

Don’t under-insure your business. Insuring your business for less than its true payroll can be a costly mistake. Annual workers’ compensation audits could result in an unexpected cost that cripples your cash flow, or worse - you could suffer a claim and not have sufficient coverage.

Maintain a safe workplace. Instead, post the required work comp posters and establish formal safety programs and first-aid procedures, which reduce the possibility of claims and can make you eligible for lower premiums.