Editor’s note: Insurance Questions answers questions about insurance coverage for equipment rental businesses. Email your insurance questions to firstname.lastname@example.org. Answers are provided by ARA Insurance, Kansas City, Mo. For more information, call 800-821-6580 or visit ARAinsure.com.
Q: As the owner or officer of my company, am I allowed to exempt myself from workers’ compensation coverage? If so, should I?
A. The laws vary by state, but generally executive officers of a corporation are included under a state’s workers’ compensation act unless they file for an exemption of coverage. Partners and sole proprietors are generally exempt from coverage, but often may elect to receive the coverage. Certain forms are usually required to be filed.
Before you take this step, it is important that you check with your health insurance carrier and review your disability coverage. Many health insurers are starting to limit or exclude coverage for work-related injuries under group health plans. There also are differences in coverage. Health plans have deductibles and co-pays for medical bills while workers’ compensation coverage does not. Lost wages and disability payments are not part of group health plans, but they are through workers’ compensation. While the premium savings gained by exempting yourself from workers’ compensation may appear to be attractive, it must be weighed against the possibility of a serious work-related accident that is either not covered or costs large deductibles and co-pays.