Kentucky law is pretty clear: If you have one or more employees, you are required to obtain workers’ compensation insurance to pay medical benefits and lost wages if an employee gets hurt on the job. The average cost of a workers’ compensation policy in the state is $1 per $100 of payroll––that’s across all industries.
Shopping for insurance can be tricky because some carriers prefer certain industries over others, so pricing is all over the place. CommercialInsurance.net makes things super simple by taking one application from business owners and then pairing them with the right carrier. As an insurance marketplace that’s partnered with more than 200 of the nation’s best carriers and brokers, CommercialInsurance.net makes it easy to shop for the best rates.
What Are Kentucky Workers’ Compensation Requirements?
Workers’ comp requirements vary by state, but almost all insist that at least some business owners get a policy to protect their employees after work-related accidents. In Kentucky, the requirement is for any company with employees to have workers’ compensation insurance. It doesn’t matter if the employee works part or full time as coverage is required with few exceptions.
According to the Kentucky state law, an employee includes:
- Anyone working under contract for hire
- Executive officers of corporations
- State, county, and city employees
- Volunteer firefighters
- Persons who sell or deliver newspapers
- Anyone performing services in a trade profession
Since Kentucky workers’ comp insurance is no-fault coverage, it doesn’t matter who is responsible for the incident leading to the injury or illness. Workers’ compensation pays the claim as long as workers are injured in the course and scope of their employment.
Who Doesn’t Need Workers’ Compensation Insurance in Kentucky?
Not every employee is subject to the workers’ compensation laws. These are known as exempt employees and include:
- Domestic servants in a home with less than two full-time employees
- Railroad and maritime workers protected by federal law
- Sole proprietors
- Partners in a firm
- Qualified members of a limited liability company (LLC)
- Independent contractors
Independent contractors, for the sake of workers’ compensation and other labor laws, are those contracted to work without direct supervision, don’t set work hours, and provide their own tools and equipment for the job.
Some individuals who must be covered, like corporate officers, can opt-out of workers’ compensation by submitting a Employee’s Written Notice of Rejection (Form 4) with the Compliance Branch of Kentucky’s Department of Workers’ Claims.
Where Can I Obtain Workers’ Compensation Insurance in Kentucky?
You buy workers’ compensation insurance on the competitive market in Kentucky. This means most policies are purchased through private insurance carriers who compete for a company’s business.
However, this isn’t the only way to purchase workers’ compensation insurance. Business owners may choose to:
- Buy a policy from the competitive state fund
- Self-insure for workers’ compensation:
- Join a self-insurance group
For those who have trouble obtaining insurance elsewhere due to the high-risk nature of their business operations, they can obtain a policy through the state’s assigned risk plan administered by the National Council on Compensation Insurance (NCCI).
Top Kentucky Workers’ Compensation Insurance Providers
Getting matched to the best insurer for your business
Professionals who work in office settings
Restaurant and food industry businesses
Fast and efficient claims
Free safety resources and tools
CommericalInsurance.net is an online marketplace that does the shopping for you. Complete one application, and CommercialInsurance.net transmits your information to more than 200 excellent insurance carriers, including The Hartford, Liberty Mutual, and Progressive Commercial, and selects the best option for your business. Business owners often get these carriers’ best price by working with CommecialInsurance.net.
If you’re looking for a small business insurance expert, look no further than The Hartford. Its workers’ compensation policies cover a wide range of industries, but they are most affordable for business owners in an office environment like consultants and lawyers. You’ll like that The Hartford’s policy comes with extras that you would have to pay for with other providers, such as volunteer coverage and extended reporting times.
Looking to have personal and commercial insurance lines in one place? Liberty Mutual is a great option with reasonable personal insurance rates for auto and home while offering a full scope of commercial insurance. When it comes to workers’ compensation, Liberty Mutual tailors policies to the industry risk and has a large appetite for restaurant and food services companies.
One way to keep workers’ comp insurance costs down is to get through claims quickly and efficiently. Chubb has mastered this process by assigning professional nurses as case managers to ensure quality care is achieved with the fastest results. Aside from workers’ compensation, small business owners can get all commercial insurance through Chubb, including business owner’s policies and professional liability insurance.
Kentucky Employers’ Mutual Insurance (KEMI)
A competitive state fund that insures thousands of employees in the state, KEMI only offers workers’ compensation insurance and makes affordable rates available to a wide range of job classes, including those that have been turned down by private carriers. Small business owners will like the free resources and safety programs that help maintain loss control, reduce claims, and keep costs down.
Can Businesses Self-insure in Kentucky?
Businesses can self-insure in Kentucky, but the requirements are quite strict and difficult to meet, including:
- Having net assets of at least $10 million.
- Completing Form SI-02, available in a self-insurance packet from the state
- Submitting certified and audited financial records for the past three years of operations
These documents must be sent to The Department of Workers’ Compensation (DWC) for review. If the DWC approves the documents, it will request the business’ loss history for the past five years. After that, the business owner may be asked for:
- A security deposit of at least
- Excess liability insurance with a $10 million per occurrence limit
- A guarantee agreement for all subsidiaries
- A resolution from the board of directors authorizing self-insurance
- A third-party administrator agreement if the business plans to use such a service
As you can see, new businesses and most small and midsized businesses (SMBs) will not be able to meet the requirements to self-insure.
How Much Does Kentucky Workers’ Compensation Insurance Cost?
Across all industries, the average workers’ compensation premium is $1 per $100 of payroll throughout the state. This means that for every $100,000 in payroll costs, a business spends an average of $1,000 on workers’ compensation premiums.
However, this is just an average—and one that includes large companies and high-risk industries. Your workers’ compensation premium is contingent on how much payroll you have, what your workers’ job classifications are, and how many claims you’ve filed in the past. Insurance carriers may differ on rates as well because of their desire to write policies for a certain type of industry or job type. A carrier with a strong appetite for a particular industry usually offers better rates.
Sample Kentucky Workers’ Comp Rates by Class Code
Industry Class Code
5183 Plumbing Contractors
7208 Towing Company
8742 Sales Professional
8810 Clerical - Office
8829 Nursing Home
8831 Animal Shelters
9063 Fitness Center
Kentucky Workers’ Compensation Cost Example
To understand how a workers’ compensation policy is priced completely, we need to understand how job classifications play a role. We’ll use the example of a plumbing company to get a good idea of how rates are achieved.
Let’s assume the plumbing company has six employees: one office clerk, one outside sales professional, and four plumbers. The payroll is broken down as follows:
- Office clerk: $35,000 annually
- Sales rep: $50,000 annually
- Plumbers: $75,000 annually each or $300,000 total
Next, we’ll use the data from the table above to calculate a premium estimate for each job classification:
- Office clerk: 9 cents
- Sales rep: 20 cents
- Plumber: $1.74
Each job class has a different risk of getting injured, so each is charged a different rate per $100 of payroll. This means we need to take the annual salary for each classification, divide it by $100, and then multiply each individual total by the job classification rate, which looks like this:
- Office clerk: ($35,000/$100) x 9 cents = $31.50
- Sales rep: ($50,000/$100) x 20 cents = $100
- Plumbers: ($300,000/$100) x $1.74 = $5,220
Now that we have the estimate for each job class in the company, we can add them up to get the overall estimated premium.
$31.50 + $100 + $5,220 = $5,351.50
This is still an estimate of the premium because it doesn’t factor in the claims history, which is done by multiplying the business’ estimated premium with its experience modification rate (EMR). An EMR represents the business’ claims history as compared to other, similar businesses. The more claims a company has, the higher the assigned EMR, and this increases the estimated premium.
Kentucky Workers’ Comp Audit Requirements
You may have noticed that our example talks about estimated premium throughout. This is because it is impossible for a business to know at the start of a 12-month policy how much their exact payroll will be. To account for this, insurers conduct a premium audit at the end of the policy term. The audit reconciles the estimated payroll with the actual payroll to get the true premium.
Companies that underestimate payroll receive a bill for the difference while those that overestimated premium get a refund check. The audit then uses the actual premium to estimate the next policy term’s premium. Premium audits are conducted every year to validate the true premium.
What Does Workers’ Compensation Insurance in Kentucky Cover?
A workers’ compensation insurance policy pays for an injured worker’s medical costs and other benefits related to lost income and wages. In Kentucky, injured workers can expect to be compensated for:
- Medical bills: All emergency and follow-up doctors’ costs, surgeries, prescriptions, and physical therapy is paid for by the insurance.
- Temporary total disabilities: The insurer pays lost wages equal to two-thirds of the employee’s average weekly wage for those unable to work for at least seven days. In Kentucky, an employee’s average weekly wage is calculated by using the highest wages paid during a 13-week period in the year prior to injury.
- Permanent partial disabilities: An employee whose injury has reached maximum medical improvement but who can still work is eligible for continued disability payments for up to 425 weeks. The maximum benefit is 75% of the state’s average weekly wage, a number announced every year by the Education and Workforce Development Cabinet.
- Permanent total disabilities: If an employee reaches maximum medical improvement but has injuries that keep that person from ever working again, then they are eligible for permanent total disability benefits. These benefits are two-thirds of the employee’s average weekly wage but no more than the state’s average weekly wage.
- Death benefits: If an injured worker dies as a result of their injuries, their beneficiaries are eligible for a lump-sum payment. Death must occur within four years of the incident and is for burial expenses and income replacement.
Employees who receive workers’ compensation benefits cannot sue their employers for damages resulting from a work injury. It’s also important to note that if a worker gets injured while committing a safety violation, his benefits can be reduced by 15%.
Workers who are committing illegal activities or are intoxicated or on drugs may have claims denied. Incidents arising from horseplay outside the scope of work can also lead to claims denial.
Kentucky Governor Andy Beshear signed an executive order in April 2020 to make it easier for workers quarantined after exposure COVID-19 at their jobs to get temporary total disability benefits. Additionally, the state will presume a COVID-19 exposure is occupational for certain employees, including first responders, healthcare workers, military and National Guard, grocery store workers, and childcare providers.
Kentucky Workers’ Compensation Coverage Example
Let’s look at an example of how a workers’ compensation claim may play out. Carly is an aide at a nursing home who hurts her back while lifting a patient out of bed. She cannot work and goes to see a chiropractor right away after notifying her employer of the accident.
The chiropractor starts Carly on a treatment plan that includes spine manipulations, ice and heat therapy, and massage. She cannot work for three weeks while under his care. Her employer’s workers’ compensation policy pays all of Carly’s treatment costs. Her temporary total disability payments, which are two-thirds of her average weekly wage, kick in once she is out of work for seven days. However, she will receive compensation for those first seven days once her disability lasts for two weeks.
What Are the Penalties for Not Having Workers’ Compensation Insurance in Kentucky?
Operating without workers’ compensation insurance can result in a $1,000 fine per employee, per day. In addition to the fine, the state can close your business down until you comply with the laws and impose criminal fines and jail time. If an employer doesn’t have a policy in force when an injury occurs, he is liable for all payments and lost wages and may be sued for other damages.
How Do I File a Workers’ Compensation Claim in Kentucky?
First, injured employees need to notify their employer immediately when an incident occurs at the workplace. The injured employee has a choice of medical providers and should seek the proper medical attention to address the injuries or illness.
Next, the employee must complete and notarize one of three forms:
- Form 101: for injury claims
- Form 102: for occupational disease claims
- Form 103: for hearing loss claims
The form is then filed with the Department of Workers’ Claims. Employees who have hired representation must file online. Workers without representation can submit paper forms. Once the claim is started, the state will need a medical report substantiating the claim as will periodic assessments. Failure to file requested documentation can result in a claim being closed prematurely or denied completely.
Kentucky Workers’ Compensation Deadlines
Kentucky workers have two years to file a claim before the statute of limitations expires. The timeline starts when the incident occurs or the last payment of temporary total disability, whichever is later.
Kentucky Workers’ Compensation Resources
- Contact Information
- Key Forms
- Important Information
In Kentucky, just about every employer is required to have workers’ compensation insurance. Failure to do so can result in criminal and civil penalties while being held 100% responsible for injuries. Business owners should seek to get a policy that meets the legal need at a price that meets their business budgets.
CommercialInsurance.net is a marketplace where you will be paired with the best insurance provider for your needs. It’s partnered with more than 200 insurance carriers, brokers, and agencies to bring affordable workers’ compensation to small business owners. Get a free quote in minutes.