Alabama Workers' Comp
Here we cover the specific state laws and requirements for small business employers and their Alabama Workers’ Comp Insurance obligations.
First, who needs to be covered by Workers’ Comp coverage? Second, where can you get it? Also, how much does it cost? All of this is covered by state law.
Additionally, are you based in Alabama, but have employees working, or transiting on the clock, to or through another state to perform work? Further, the Workers’ Compensation laws in THAT or THOSE states will also determine coverage requirements. Finally, if your employees are working in more than one state, you will need coverage in each state.
WorkersComp4SmallBusiness can help with just that.
Alabama Workers Compensation Insurance
In the state of Alabama, how you insure your Alabama Workers’ Comp liability is up to you. There are several options, with one or two being the most prevalent.
Here we cover the specific state laws and requirements for small business employers and their Workers’ Compensation Insurance in the state of Alabama.
Who needs to be covered by Workers’ Comp coverage? Where can you get it? How much does it cost? All of this is covered by state law.
Are you based in Alabama, but have employees working, or transiting on the clock, to or through another state to perform work? The Workers’ Compensation laws in THAT or THOSE states will also determine coverage requirements. Further, if your employees are working in more than one state, you will need coverage in each state.
Workers' Compensation Requirements in Alabama
First, if you regularly employ 5 or more employees, full-time or part-time – including officers of a corporation of any single business – then Alabama Workers’ Compensation statutes require you to have workers’ compensation insurance .
Second, if you employ domestic employees, farm workers, or casual employees, then you are NOT required to carry Workers’ Comp coverage, BUT you may ELECT to carry such coverage for the benefit of your employees AND your small business.
Third, if you employ workers on-site in the construction, or assistance in construction, of new, single family detached residential dwellings, then you are required by Alabama Workers’ Compensation statutes to have Workers’ Compensation coverage.
Finally, if an independent contractor, you might not be covered by the contracting business’ Workers’ Comp coverage. You may very well need to provide proof of Workers’ Compensation coverage.
Are you an independent contractor or an employee? Excellent Question. Let’s explore that question.
Why Carry Workers Compensation Insurance?
- Required by law;
- It remains the exclusive remedy for on-the-job injury and occupational disease;
- The possession of this valuable insurance coverage also provides you and your small business with limited civil liability;
- Avoids double compensation in the event of a claim; and
- Finally, you avoid significant penalties and fines for failing to have workers’ comp coverage.
Benefits of Having Workers' Comp to Small Business Employers and Employees
What are the benefits of having Workers’ Compensation insurance for your small business and your employees?
First, the employee is guaranteed a “benefit certain” in the event that sustain an on-the-job injury or occupational disease.
Second, the small business employer pays for this insurance – another significant benefit to the employee.
Finally, the employer enjoys the “exclusive remedy” protection provisions of the Alabama Workers’ Compensation laws. This outlines that an employee with a valid claim is ONLY entitled to the benefits provided by the statutes – thereby limiting the small business’ employer liability.
Where to Buy Workers' Comp Insurance?
In fact, there are several places you can buy Workers’ Comp coverage in Alabama. You may purchase Worker Comp insurance from a commercial Workers’ Compensation insurance company approved to do business in Alabama, you may secure coverage from a group self-insurance fund, or you may choose to self-insure as an individual business – if you qualify. However, the latter two options are rare. Indeed, the best option is to secure workers’ compensation insurance through a commercial carrier.
Four (4) Ways for Small Businesses to Meet Workers' Comp Obligations
As a matter of fact, there are four (4) ways for a small business to meet their obligations under the Alabama Workers’ Compensation laws:
Commercial Insurance / Voluntary Market
- The “Voluntary Market” is a form of commercial Insurance – where you purchase an approved policy through an insurance carrier via WorkersComp4SmallBusiness. This is THE IDEAL option for a small business employers with low to medium workers’ comp exposure or claims history. These approved policies are recognized by state courts, offered at a reasonable premium, and guaranteed by the Alabama Insurance Guaranty Association. Further, with the assistance of WorkersComp4SmallBusiness, you also have the ability to shop the market for the best coverage at the most affordable premium.
Request a quote from WorkersComp4SmallBusiness.com
Commercial Insurance / Assigned Risk Pool
Commercial Insurance – the Assigned Risk Pool – allows you to purchase insurance when insurance companies in the voluntary market decline to offer you coverage due to high workers comp exposure or claims history – also known as the “Involuntary Market.” Importantly, this option is best suited for the small business employer with medium to high workers comp exposure and/or claims history. This type of coverage is also an approved policy recognized by the state courts and guaranteed by the Alabama Insurance Guaranty Association. It should be noted, this type coverage comes at higher cost, without a choice in insurance carrier and you are still subject to rate increases.
To secure this coverage option, you must have decline letters from two (2) insurance companies, providing proof to the NCCI Assigned Risk Pool via WorkersComp4SmallBusiness.com
Group Self-Insurance
Group Self-Insurance – is an option that is available to employers where the employer enters into a common fund where employers by mutual agreement have pooled their collective liabilities for the purpose providing workers comp coverage to their employees. Obviously, candidate businesses must meet underwriting requirements set forth by the fund and meet requirements qualifying for self-insurance.
This coverage is approved, regulated by the state of Alabama Department of Labor and is recognized by the state courts. Further, it can offer reasonable rates and a choice of available funds. However, the Fund determines your renewability, subject to possible rate increases, and if the Fund becomes insolvent you can be assessed for outstanding obligations of the Fund – called “joint & several liability.” This option can be looked into by WorkersComp4SmallBusiness on your behalf or you may contact NCCI directly, if you prefer.
Individual Self-Insurance
Individual Self-Insurance – is an option where you actually become the insurer – a very serious long-term commitment requiring a larger employer meeting hefty financial requirements. An employer must provide audited financial statements, minimum $5 million net worth, current asset to liability ratio of 1.0 or greater, and a positive net income.
This type coverage is recognized by state courts, but the long-term liability from providing lifetime medical benefits mandated by law makes this option out of the question except for the largest of financially viable employers.
Subcontractors / Independent Contractors
Most subcontractors and independent contractors are sole proprietors or partnerships. Unless they are an employee, they will not be covered by their insurance policy, and they may need proof of workers comp insurance.
Are they an independent contractor or an employee? Great Question. Let’s get some idea.
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Obtaining Workers Comp Insurance for Your Small Business
Alabama has its private, voluntary and involuntary markets, meaning employers may purchase a workers comp policy from any insurance carrier or broker licensed to write workers compensation in the state.
Request a quote from WorkersComp4SmallBusiness.com
Alabama Coverage and Rates
NCCI, the National Council on Compensation Insurance, is used by most states to collect workforce injury data and make recommendations regarding insurance rates. NCCI administers workers compensation residual market services, offering coverage to businesses that who are unable to find coverage through private insurers. NCCI also recommends rates in Alabama.
When accepted, insurers must use these rates as a baseline for premiums. The type of industry, total covered payroll, claims history and other individual details all influence total premiums.
Most importantly, your business must comply with the state where your employees perform work – not necessarily where the business was founded or is based.
If your business operates in multiple states, or employees travel across state lines to work, you may need to modify your policy to guarantee coverage.
Alabama Work Comp Resources
Workers’ compensation insurance coverage in Alabama is regulated by the Alabama Department of Labor. They can be reached at (334) 956-4044, toll-free at (800) 528-5166.
Alabama Workers’ Comp rates are determined through the NCCI (National Council on Compensation Insurance). Additionally, Alabama has a high-risk pool for those businesses having trouble securing coverage – the Alabama assigned risk pool is Alabama Assigned Risk Pool.
Areas We Serve in Alabama
- Birmingham
- Huntsville
- Montgomery
- Mobile
- Tuscaloosa
- Hoover
- Dothan
- Auburn
- Decatur
- Madison
- Florence
- Phenix City
- Prattville
- Gadsden
- Vestavia Hills
- Alabaster
- Opelika
- Enterprise
- Athens
- Daphne
