When you decided to start a business and considered all the options and benefits associated with different types of property, it probably never crossed your mind that your choice could affect the amount of premium you pay for workers’ compensation insurance coverage. Your type of operation and the number of employees not only affect your premium, but ownership of the business also has a financial impact.
Whether you, as the business owner, will be included, excluded or ineligible for coverage will depend primarily on the type of legal structure under which you are currently operating. Here’s a quick overview of whether your earnings as an owner can be included for premium purposes under some common entity types:
Individual: 100% individual ownership of the owner. Not eligible / excluded from coverage under Ca’s workers’ compensation insurance system, therefore earnings will not be included for premium purposes. However, you can choose to be included in the coverage.
Camaraderie: Each general partner is assumed to own an equal share. General Partners You can choose to be excluded from coverage by the CA Workers’ Compensation Insurance System. The earnings of all general partners who choose to be included in coverage will be charged at the member’s minimum, not to exceed the member’s maximum, as established annually by the Workers’ Compensation Insurance Rating Office (WCIRB). The minimums / maximums for 2012 are $ 40,300.00 and $ 104,000.00 respectfully. Members who do not work and are not paid are not eligible for coverage.
Limited liability company: Each member is assumed to have equal shares. Manage members you may elect to be included in the coverage of the CA Workers’ Compensation Insurance System. The earnings of all managing members who choose to be included in coverage will be charged at the Official’s minimum / maximum. All working and paying members will be collected at their actual compensation rates. Non-working and unpaid managing members are not eligible for coverage.
Corporation: The shares with voting rights determine the percentage of ownership. All officers and members of the Board of Directors who provide services for pay for a quasi-public or private corporation will be included for coverage and such earnings will be limited to the Minimum / Maximum of Officers, however, when the officers and directors own all the shares. of a private company. corporation, they may choose to be excluded from coverage. All salaried and paid corporate officers who do not have shares will be collected at the minimum / maximum number of officers. Officers who do not work and are not paid are not eligible for coverage.
The rules regarding ownership are very complex and can have a great financial impact on your business. Knowing what questions to ask the insurance broker can save you thousands of dollars in additional premiums as a result of ownership changes undisclosed to your operator due to outdated information in your broker files or because you did not notify your broker or operator of any later change. in the propiety.
Arm yourself with helpful information and save thousands of dollars in premiums! Additional information can be found in the Experience Rating Plan, which is part of the California Code of Regulations, or contact your Insurance Broker. Also, consider a separate disability insurance policy to protect business owners’ income; it can save you hundreds or thousands of dollars annually in Workers’ Compensation premiums.