Which employers must have worker's compensation insurance?

Think of workers compensation insurance in the same way as your auto insurance policy. With your car, if you get in an accident that is your fault, your insurance carrier pays claims under the provisions of your insurance policy. It works the same way with an employer’s workers’ compensation policy.

Although the Workers Comp system is “no-fault” because it’s the employer’s insurance policy that pays the claims, if injured employees make the workers comp claims the employer’s insurance policy rates will most likely increase.

In California, there are hundreds of insurance companies providing worker’s comp insurance coverage to employers. Just like your car insurance, the employer tries to find a carrier based on what the policy will cost, deductibles and coverage limits. And just like your auto insurance, if injured employees have made claims, at policy renewal time a carrier will require the employer to pay higher rates for coverage.

If you want to keep premiums down, it’s a good idea to make a habit of providing a safe and healthy environment for your employees. That’s the best and only way to keep your record clean and prevent claims against your policy.

As said on California’s Worker’s Compensation Website: “California law requires employers to have worker’s compensation insurance if they have even one employee.” Failing to have workers compensation insurance for an employee is a criminal offense. Section 3700.5 of the California Labor Code makes it a misdemeanor punishable by either a fine of up to $10,000 or imprisonment in the county jail for up to one year or both.

It's no secret that California law could be troublesome for employers that fail to provide their employees with worker’s comp insurance coverage.