How does your business ownership affect your workers’ compensation insurance premium?

When you decided to go into business and considered all of the options and benefits associated with different types of property, it probably never crossed your mind that your choice can affect the amount of premium you pay for workers’ compensation insurance coverage. . Not only does his type of operation and the number of employees affect his premium, ownership of the business also has a financial impact.

Whether you, as the business owner, will be included, excluded, or ineligible for coverage will depend primarily on the type of legal structure under which you currently operate. Here’s a quick overview of whether your earnings as an owner can be included for premium purposes based on some common entity types:

individual: Individual property 100% of the owner. Not eligible/excluded from coverage under the Ca Workers’ Compensation Insurance system, therefore earnings will not be included for premium purposes. However, you can choose to be included for coverage.

camaraderie: Each general partner is assumed to own equal shares. General Partners You may choose to be excluded from coverage under the CA Workers’ Compensation Insurance System. Earnings for all general partners who elect to be included in coverage will be collected at the partner minimum, not to exceed the partner maximum, as established annually by the Workers’ Compensation Insurance Ratings Bureau (WCIRB). The minimum/maximum for 2012 are $40,300.00 and $104,000.00 respectively. Non-working, non-paying partners are not eligible for coverage.

limited liability company: It is assumed that each member has equal shares. Manage members You may elect to be included for coverage under the CA Workers’ Compensation Insurance System. Earnings for all managing members who choose to be covered will be collected at the official minimum/maximum. All working and paying members will be collected at their actual compensation rates. Managing members who are not working and not receiving pay are not eligible for coverage.

Corporation: Voting shares determine ownership percentage. All officers and members of the board of directors who perform services in exchange for a quasi-public or private corporation will be covered and such earnings will be limited to the officer’s minimum/maximum, however, where officers and directors own all shares in a private corporation corporation, they can choose to be excluded from coverage. All active and paid corporate officers who do not have shares will be collected based on the minimum/maximum number of officers. Officers who are not on duty and are not paid are not eligible for coverage.

Ownership rules are very complex and can have a huge financial impact on your business. Knowing what questions to ask your insurance broker can save you thousands of dollars in additional premiums as a result of changes in ownership that were not disclosed to your insurer due to outdated information in your brokers’ files or because you did not notify your broker or insurer of any subsequent changes. in the propiety.

Arm yourself with helpful information and save thousands of dollars in premiums! Additional information can be found in the Experience Rating Plan, which is part of the California Code of Regulations, or contact your insurance broker. Also, consider a separate disability insurance policy for income protection for business owners; can save you millions or thousands of dollars in workers’ compensation premiums annually.