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Workers Compensation Insurance

Workers Compensation coverage provides not only medical payments, but also coverage for lost wages and accidental death for job-related accidents or illness. It is determined as a factor of payroll, so itís easy to calculate your cost. However, there are instances in which business owners wish to be exempt from coverage. Highlights of the Missouri Workers Compensation statutes are:

  •   Businesses with five or more full- or part-time employees are required by law to carry workers compensation insurance.

  •   Contracting businesses with one full- or part-time employee are required to carry workers compensation insurance.

  • Sole proprietors and partners are excluded under the workers compensation statute unless they choose to be included.

  • LLC members and corporate officers are considered employees in Missouri and are included in workers compensation coverage. LLC members have the option to exclude themselves from coverage in Missouri, but to do so each LLC member must complete one of the LLC Rejection of Coverage forms, depending on whether the LLC Operating Agreement is an oral or written agreement.

  • A general contractor is liable for any injuries to uninsured subcontractors or their uninsured employees and can require that subcontractors carry workers compensation insurance.

If you are a new business owner, you should know that it is usual and customary for companies with which you do business to require a certificate of coverage to verify that you have workers comp. You just have to call your agent to get this documentation.

As of July 1, 2011, the payroll to be used by all owners is $35,600 with 10 percent of that amount allocated to either 8810-Clerical or 8742-Outside Sales. This payroll amount applies to sole proprietors/partners, corporate officers and LLC members. The payroll threshold limits are adjusted annually. Payroll in excess of the $35,600 limit can be excluded when determining premium. Thus it may be less costly for the small contractor to provide his owner coverage than for the general contractor to purchase Workers Comp coverage for him and his employees.

Coverage Subject to Audit

When Workers Comp coverage is written, it is based upon your estimated annual payroll for each classification of employee. All coverage is subject to audit; generally after the policy period has expired someone from the insurance company will either conduct a telephone or physical payroll audit. Then the premium for your workers comp coverage will be recalculated based upon your actual payroll amounts.

If your estimated payrolls were less than your actual payroll, you will be charged additional premium which you must pay within 90 days. If actual payrolls were less than estimated you will receive a refund of any unearned premium. If you have a major change in your business payroll during the policy year, it is wise to have your workers compensation policy endorsed to reflect the change. There are some Workers

Compensation carriers that allow you to report your payroll on a monthly basis, which can be good for your cash flow. However, many of these companies also require that you allow them to provide your payroll service, which may require a change in your business processes.



Five Star Insurance Agency, Inc.



215 East Main Street

Festus, Missouri 63028

Phone: 636-937-9383

Fax: 636-937-9392



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