Frequently Asked Questions
Proof of Coverage FAQs
Who is required to carry workers′ compensation insurance coverage?
Every employer that has five or more employees must insure its workers′ compensation obligations with an insurance carrier that is authorized to write such insurance in the state of Missouri by the Department of Insurance, Financial Institutions and Professional Registration, or meet the Division of Workers′ Compensation requirements to self-insure its liabilities. Construction industry employers that erect, alter, demolish or repair improvements are required to carry workers′ compensation insurance if they have one or more employees.
The statutory definition of "employee" includes both full and part-time employees, and includes every person in the service of an employer under any contract of hire, express or implied, oral or written, or under any appointment or election, including executive officers of a corporation.
Sole proprietors and partners are not themselves covered unless they elect to be covered. On the other hand, close family member-employees and members of limited liability companies are presumed to be covered unless they opt out.
The Workers′ Compensation Act does exempt a very small and very specific group of employees, which includes farm laborers, domestic servants, certain real estate agents and direct sellers and commercial motor-carrier owner-operators. Please refer to Section 287.090 RSMo for additional information.
Employers that don′t have the required number of employees or who have employees in the exempt categories may nevertheless "elect" to come under the law by purchasing and accepting a valid workers′ compensation insurance policy or endorsement. The election takes effect on the effective date of the workers′ compensation insurance policy or endorsement and continues while the policy or endorsement remains in effect. The exempt employer may withdraw the workers′ compensation coverage by cancellation or nonrenewal of the workers′ compensation insurance policy or endorsement.
Exempt employers that decide not to purchase workers compensation insurance or to self-insure remain potentially exposed to civil lawsuits brought by employees who are injured during work.
If you have further questions please contact the Division′s toll-free number 800-775-2667.
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How do I know if I am in the construction industry?
If you erect, alter, demolish or repair improvements you are regarded as a construction industry employer and are required to purchase workers′ compensation insurance if you have one or more employees. The law does not contain a list of employers who are classified as construction industry employers. However, carpenters, plumbers, electricians, roofers, painters, landscapers, welders, machinery installers, concrete construction workers, earthmovers or drillers, generally fall within the contracting classification codes.
Please check the Department of Insurance, Financial Institutions and Professional Registration website for information relating to the Contractors Credit Premium Adjustment Program that provides a premium credit for construction industry employers who pay high hourly wages. It applies only to the construction class codes--it does not apply to office workers or other non-construction employees.
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What are the workers′ compensation provisions that apply to a limited liability company?
With regard to a limited liability company, as defined in Section 347.015 RSMo, you need to obtain coverage for the employees of the limited liability company who are not members of the limited liability company. Members of the limited liability company are also provided coverage, but such members may individually elect to reject such coverage by providing a written notice of such rejection on a form developed by the Department of Insurance, Financial Institutions and Professional Registration to the limited liability company and its insurer. A member who elects to reject such coverage shall not thereafter be entitled to workers′ compensation benefits under the policy, even if serving or working in the capacity of an employee of the limited liability company. The member may rescind his rejection of coverage.
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My company is a limited liability company, are the LLC members covered?
Limited liability company members are covered by your workers compensation policy unless they specifically state they do not wish to be covered, using a special endorsement to your policy. Your insurer can provide you with this endorsement. You may also obtain the "Limited Liability Company Exclusion Endorsements" form from the Department of Insurance, Financial Institutions and Professional Registration′s website.
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Does workers′ compensation cover my family members?
Family members of sole proprietors and partners are covered unless they are specifically excluded on an endorsement (NCCI form WC 00 03 08, Partners, Officers and Others Exclusion Endorsement). An employee who is a member of the employer′s family within the third degree of affinity or consanguinity is still counted towards the total number of employees to determine if the employer is required by law to carry workers′ compensation insurance. This provision does not, however, apply to family members of LLCs or corporations.
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My business has volunteers do I need to purchase workers′ compensation insurance coverage for the volunteers?
The workers′ compensation law does not apply to volunteers of:
- a tax-exempt organization which operates under the standards of Section 501©(3) of the federal Internal Revenue Code;
- the volunteers are not paid wages; and
- the volunteers provide services purely on a charitable and voluntary basis.
You should contact your insurance agent if you would like to purchase workers′ compensation insurance coverage on the volunteers.
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I am an S corporation, am I subject to the law and do I need to carry workers′ compensation insurance?
The Workers′ Compensation Law does not contain any specific provisions relating to S corporations. Under the law, every employer that has five or more employees must insure its workers′ compensation obligations. Construction industry employers that erect, alter, demolish or repair improvements are required to carry workers′ compensation insurance if they have one or more employees. The definition of employee includes executive officers of a corporation.
Please contact your insurance agent or tax preparer to answer specific questions relating to the nature of your business operations, structure of the company and whether you are required to carry workers′ compensation insurance.
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I am not required to carry workers′ compensation insurance under the law; however, my general contractor says that I need to provide proof of workers′ compensation insurance coverage. Can he do this?
Yes. Under the Missouri workers′ compensation law, sole proprietors and partners must individually elect to purchase a valid workers′ compensation insurance policy for themselves. The general contractor hires a subcontractor, doing same or similar types of work (e.g. building construction). The subcontractor states he is a sole proprietor and therefore he is not legally required to carry workers′ compensation insurance coverage on himself. However, because that subcontractor has chosen to not purchase an insurance policy, that subcontractor is therefore uninsured. Because that subcontractor is uninsured, the general contractor may become liable for injuries that the subcontractor may sustain while working on that job. If the subcontractor is uninsured, the insurance company for the general contractor may be required to pay claims, and, as a result, will charge premium for that uninsured subcontractor. The general contractor′s workers′ compensation insurance policy will dictate how premium would be calculated, what records are needed to compute the premium, and the audit of the records relating to the policy. The general contractor needs to provide proof to its insurance carrier that the sub or independent contractor has secured its own workers′ compensation obligations to avoid paying premium. Therefore, the general can require the subcontractor to provide proof of workers′ compensation insurance coverage.
The issue of whether an employer-employee relationship exists between employer, on the one hand, and the injured employee on the other hand, is determined by the Administrative Law Judge and is based upon the evidence submitted in a particular case. The statutory provision that needs to be examined is Section 287.040 RSMo.
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What procedure does a corporation need to follow in order to be exempt from the workers′ compensation requirements?
A corporation may elect to withdraw from the workers′ compensation requirements if there are no more than two owners of the corporation who are also the only employees of the corporation. The corporation should contact the Division′s Customer Service Unit at 800-775-2667 to obtain further information on the paperwork that needs to be submitted to file the notice of election to be withdrawn. A corporation that makes this election may withdraw its election by filing with the Division a notice to withdraw the election. The notice is effective thirty days after the date of the filing, or at a later date as may be specified in the notice of withdrawal.
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Does the insurance policy that the employer purchased cover all liabilities in the state of Missouri?
The Division verifies proof of workers′ compensation insurance coverage including non-renewals and cancellations through the National Council of Compensation Insurance (NCCI) which is the designated "advisory organization" for the state of Missouri. Pursuant to the provisions of Section 287.280 RSMo, an employer shall "insure his entire liability" with an insurance carrier authorized to do business in the State of Missouri. Therefore, an insurance policy purchased by an employer covers all the liabilities in the state of Missouri, for all the address locations in Missouri where the employer operates or conducts its business. In order for the Division to verify proof of coverage, you must provide the Division with the employer′s name and Federal Employer Identification Number. The search is based upon the primary named insured. Other names and address locations used by the primary insured may appear as a link to the primary insured employer, however, the policy is purchased by the primary insured. The Division uses the primary insured′s information for verifying proof of coverage.
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