Tennessee companies that have five or more employees generally are required to maintain workers’ compensation insurance for their employees. A couple of notable exceptions are those in the construction or coal industries that have at least one employee. The average cost of a Tennessee workers’ compensation insurance policy is 81 cents per $100 of payroll wages.
If you are looking for Tennessee workers’ compensation insurance, talk to the experts at CommercialInsurance.NET. The company matches you to the carrier or broker that can get you covered for a price you can afford.
What Are Tennessee Workers’ Compensation Requirements?
Tennessee has more stringent workers’ compensation requirements for those in the construction and coal industries compared to other industries. According to Tennessee’s Bureau of Workers’ Compensation, employers in these two industries with one or more employees must maintain insurance. Tennessee laws require all other employers with five or more employees to obtain a workers’ comp policy.
Not only do these requirements include full-time and part-time employees, but family members and corporate officers are also included when they meet the definition of an employee. Additionally, Tennessee law requires business owners to cover every person ― including minors, whether they are lawfully or unlawfully employed.
Please note: Just because an employer isn’t required to get workers’ compensation doesn’t mean they are off the hook for the costs of an injured employee. Employees may file a lawsuit against the employer after a workplace injury if they think the employer is liable for the costs associated with the injury.
Where Can I Obtain Workers’ Compensation Insurance in Tennessee?
Tennessee operates as a competitive market when it comes to workers’ compensation insurance. This means that employers can obtain workers’ comp policies through private insurance carriers. The state does have an assigned risk plan, managed by the National Council on Compensation Insurance (NCCI), for companies unable to obtain insurance from other carriers. As an assigned risk plan, the NCCI is considered a provider of last resort.
Top Workers’ Compensation Insurance Insurers in Tennessee
The Hartford is a leading national provider of business insurance, including workers’ compensation. Its workers’ comp policies are ideal for small business owners who provide professional services such as attorneys, accountants, and consultants. One thing that makes its policies stand out from the competition is the inclusion of longer reporting periods and coverage for exempted employees ― these are included automatically for no additional charge. The Hartford’s relationship with healthcare providers can also help business owners save up to 60% on billed medical services.
CommericalInsurance.net is an online small business insurance referral service that pairs small businesses with the right insurance partner for their risks. With more than 200 insurance partners, CommercialInsurance.net has the right resources to place nearly any business with a carrier, often earning the lowest possible premium offered. Quotes are free and take only a few minutes to get.
Liberty Mutual may be known for its personal lines of insurance, but it also has a broad serving of small business insurance catering to companies nationwide. Liberty Mutual has a high appetite for retail and food industry providers and provides policyholders with access to industry-specific safety training, self-assessment tools, and other resources to reduce the chances of employee injury.
Chubb is an innovator when it comes to workers’ compensation and small business insurance. Its broad definition of small business allows Chubb to offer workers’ comp coverage to companies with up to $30 million in revenue and as little as just one employee, making it an excellent option for medical offices. Additionally, Chubb’s claims process includes a medical management system that integrates an internal nurse case manager to work with adjusters.
The NCCI is an organization designed to support workers’ comp systems by providing insights, data, and ratings assistance. Tennessee is one of the states where the NCCI administers an assigned risk plan to help businesses get workers’ comp when private carriers refuse to offer coverage. This is considered a last-resort insurer but is often the best option for businesses that have been declined because of their claims history.
How Much Does Workers’ Compensation Insurance Cost in Tennessee?
The cost of Tennessee workers’ compensation insurance depends on your industry, payroll, claims history, and employees’ duties. According to the most recent report from the National Academy of Social Insurance, the average cost of workers’ comp across all industries in Tennessee is 81 cents per $100 of wages. This continues a downward trend going at least as far back as 2012.
Sample Tennessee Workers’ Comp Rates by Class Code
Industry Class Code
2121 Breweries - Craft Beer
5183 Plumbing Contractors
7605 Alarm Installation
8393 Auto Body Repair
8810 Clerical - Office
8829 Nursing Home
Insurers calculate your workers’ compensation costs by taking the job code assigned to the business by that state’s ratings bureau (the NCCI in Tennessee’s case) and multiplying it by your payroll divided by $100. The total is then multiplied by a claims factor called the experience modification rate (EMR).
Tennessee Workers’ Comp Cost Example
An alarm installation company has three technicians and two office clerks. Each technician earns an annual salary of $60,000 for a total of $180,000 in payroll. The clerks both earn $35,000 per year for a total of $70,000 in payroll. The company has no previous claims.
First, let’s look at how much the technicians’ premium will cost. To do so, divide the technicians’ portion of the total payroll by $100 to get $1,800. Next, multiply that total by the low rate assigned to class code 7605, 99 cents, for a total of $1,782.
($180,000 / $100) x $0.99 = $1,782
This number does not include the clerks (class code 8810). Most states separate clerical workers’ payroll because they are found across most industries and have little risk. Doing the same calculations for the clerks with the lower rate looks like this:
($70,000 / $100) x $0.07 = $49
Now add the $1,782 and $49; the estimated total premium for a year for this alarm installation company is $1,831. Again, that is just the estimate. Most insurers also factor in the business’ EMR. This business hasn’t any claims, so chances are its estimate is fairly close to its actual premium.
Tennessee Workers’ Comp Audit Requirements
Because insurers base every workers’ compensation premium on an estimate of a business’ annual payroll, they conduct an audit at the end of the policy period. This audit confirms the numbers and reconciles differences.
Using our example of the alarm installation company, let’s assume that the third technician quit in the last quarter. He didn’t make the full $60,000, so the alarm company would get a refund for the difference after the audit. Meanwhile, if the company hired a more expensive technician immediately to replace him, its payroll would be higher, and the alarm installation company would get a bill for an additional premium based on the audit.
Audits are required to renew workers’ compensation policies. Avoiding the audit can not only lead to nonrenewal with your existing carrier, but it will create problems when you look for a new carrier. Whichever one you choose will almost certainly ask for the results of any previous audit.
What Does Workers’ Compensation Insurance in Tennessee Cover?
While the rules vary from state to state, most workers’ compensation insurance covers the costs associated with an employee getting hurt while working. Tennessee workers’ comp offers two main types of benefits:
- Medical care: Pays for emergency care when necessary and reasonable, treatments provided by an authorized treating physician, mileage to and from appointments, and some medical devices
- Partial wage replacement: Covers a portion of lost income when an injured employee is either unable to work or earns a lower wage while recovering
Partial wage replacement is divided further into permanent disability benefits, temporary disability benefits, and death benefits. If the employee is unable to go back to work immediately (or at all), they can receive up to two-thirds of their average weekly wage based on the previous 52 weeks of income. If the employee dies as a result of their work-related injury or illness, beneficiaries can apply for death benefits. These include:
- $20,000 paid to the estate if there are no dependents
- 50% of the person’s average weekly wage if there is only a surviving spouse
- Up to 66.67% of the average weekly wage if there are additional dependents
- Up to $10,000 for burial expenses
Tennessee Workers’ Compensation Coverage Example
Pete works in a warehouse where he is responsible for inventory management. While working on some scaffolding, he falls and breaks both legs, an injury that will keep him from working until his legs heal. Not only does his employer’s workers’ compensation insurance policy pay for the ambulance ride to the hospital, but it also covers all of his medical care. Additionally, the policy pays temporary total disability payments, which are two-thirds of this average weekly wage of $1,000, or $666.66 per week in replacement income.
What Are the Penalties for Not Having Workers’ Compensation Insurance in Tennessee?
Not having or complying with Tennessee workers’ compensation insurance can result in penalties assessed to the company. For example, employers who fail to maintain workers’ comp or who misclassify employees as independent contractors may face fines of up to one and half times their estimated annual premium. Employers may also face fines between $50 and $5,000 for failing to file a first report of injury on time or causing a claim to be filed on the employee’s health insurance. The employer may be held liable for the injuries of the workers and is subject to civil penalties ranging from $50 to $5,000 per violation.
Additionally, employers who fail to make timely disability payments can be assessed a 25% penalty that is paid to the worker. There is also a fine of up to $10,000 or more for failure to comply in a timely manner with an administrator’s order.
How Do I File a Workers’ Compensation Claim in Tennessee?
When injured on the job, the employee must first inform the employer of the injury and details surrounding the incident. Once notified, the employer:
- Completes and files First Report of Injury (Form C-20) with the insurance carrier
- Provides a panel of three physicians from which the injured worker must pick an authorized attending physician
- Asks the injured worker to sign an Employee’s Choice of Physician Form (Form C-42) to show the worker has selected an authorized attending physician
- Submits a Wage Statement (Form C-41) to the insurance carrier
Tennessee Workers’ Compensation Deadlines
There are a couple of key deadlines to keep in mind when dealing with workers’ compensation claims to ensure they are processed properly and not delayed or denied automatically:
- Injured employees have 15 days to inform the employer about a work-related injury and the circumstances surrounding it.
- Employers have one working day from being notified of a work injury to file a First Report of Injury with their insurance carrier.
- Insurance carriers have 15 days to notify the employer and injured worker that the claim has been either accepted or denied.
- Insurance carriers must start paying temporary disability benefits for a compensable injury within 15 days of notification.
Tennessee Workers’ Comp Resources
- First Report of Injury (Form C-20): Employers complete this form and submit it to their carriers to notify them of workplace injuries
- Employee’s Choice of Physician (Form C-42): Employers list three physicians on this form; employees select one to be their authorized attending physician.
- Wage Statement (Form C-41): Employers submit this form to their carriers when an injury keeps an employee from working.
- Reduction in Workforce (Form 1-3): Employers use this form to notify the state that they have reduced their workforce and are no longer required to carry workers’ comp insurance.
Many employers in Tennessee need to obtain a valid workers’ compensation policy to protect employees. Workers’ comp policies cover employers’ liability for the expenses associated with a worker being injured on the job.
To get the best possible options for your workers’ compensation policies, contact CommercialInsurance.net. They’ll shop for the right policy for your needs.