Accepted Methods for Providing Insurance
Those subject to providing workers’ compensation insurance for their employees must either go through an insurance carrier or may choose to be self-insured upon approval from the Division.
Many employers purchase insurance from an insurance carrier just like they would buy auto insurance and other liability insurance. When buying insurance in the insurance market, most employers buy a policy from an insurance agent who writes the policy through an insurance company the agent represents. The remaining employers who are not self-insured may potentially be insured through the residual market, commonly known as the assigned risk pool or “pool.” Employers in the pool usually consist of those employers who have trouble finding coverage in the voluntary market and those with small premiums (under $10,000). The Missouri Department of Insurance, Financial Institutions and Professional Registration provides an on-line service where an employer can inquire about workers’ compensation rates by insurance companies and rate comparisons for all workers’ compensation insurers in the state. An employer will need to know all applicable classification codes to inquire about manual rates.
As an alternative to purchasing an insurance policy, employers and groups of employers may apply to the Division of Workers’ Compensation to self-insure their workers’ compensation obligations. Application can be made through the Division’s Insurance Unit. The Insurance Unit functions as the chief underwriter, regulator and auditor for the self-insurance program. There are two types of self-insurance individual and group trusts. An employer wishing to self-insure must have the financial capability to self-insure. The inability of an employer to meet financial obligations of work-related injuries will directly impact the entire financial stability of the company. A potential advantage of self-insuring is reduced costs.
Liability and Exemptions
In the state of Missouri you are required to carry workers’ compensation insurance if you have five or more employees, unless you are in the construction industry, then you must carry workers’ compensation insurance if you have one or more employees. Employers that don’t have the required number of employees or who have employees in the exempt categories may “elect” to come under the law and carry workers’ compensation insurance. Exempt employers that decide not to purchase workers compensation insurance or to self-insure remain exposed to civil lawsuits brought by employees who are injured during work. Sole proprietors and partners are not themselves covered unless they elect to be covered; close family member-employees and members of a limited liability company are presumed to be covered unless they opt out.
Railroad, postal, and maritime workers are covered under federal laws and not by Missouri Workers’ Compensation Laws. Other exceptions include: farm labor, domestic servants in a private home, occasional labor performed for or related to a private household, qualified real estate agents, direct sellers, volunteers of a tax exempt organization where such volunteers are not paid wages and adjudicators, sports officials or contest workers for interscholastic activity programs or amateur youth programs who are not employed by the sponsor of the event.