Understanding the Hard Insurance Market and Its Impact on You

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The insurance landscape in California is undergoing a significant shift, with major carriers reducing their presence in the state’s market. This development has led to the emergence of a “hard market,” characterized by rising rates and limited coverage options. In this blog, we aim to shed light on what a hard market means for consumers and why it’s a cause for concern.

A hard market refers to a period in the insurance industry where rates increase, coverage becomes more limited, and insurers become more cautious about taking on risks. This tightening of conditions stems from various factors, including rising construction costs, catastrophic events like wildfires, and regulatory constraints.

As insurance carriers withdraw or reduce their presence in California, consumers are left with fewer options to choose from when it comes to securing coverage, which leads to higher prices and potential gaps in insurance protection.

In fact, one of our clients, a construction contractor, recently received a notice from their insurance carrier. They were informed that their carrier would be discontinuing coverage for their warehouse location in Riverside. With a notice period of just 90 days, the contractor was faced with the challenge of finding alternative insurance options within a limited timeframe. This example highlights the difficulties companies encounter in obtaining affordable insurance and the impact it has on their operations and overall costs.

Homeowners are also affected by the hard market, as limited coverage options and rising premiums make it more challenging to find affordable and comprehensive homeowners insurance. This can lead to financial hardship and potential gaps in coverage, leaving homeowners exposed to significant risks.

The emergence of a hard insurance market in California brings forth challenges for consumers, including higher premiums, limited coverage options, and potential gaps in insurance protection. It is essential to be aware of these market dynamics to make informed decisions and explore alternative options to secure the necessary coverage.

Working with insurance professionals who understand the complexities of the current market can help navigate the challenges and find the best available solutions.

Featured image credit: Envato Elements by rfaizal707 | Licensed | All Rights Reserved

EPLI: Does Your Construction Business Need It?

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In the world of insurance, there are so many acronyms to keep track of. Today, let’s chat about Employment Practices Liability Insurance (EPLI).

More specifically, we’re going to cover the industries that need EPLI as well as answer the question, does your construction business need it? If so, why?

WHAT IS EPLI?

Employment Practices Liability Insurance, or EPLI, is insurance that “provides coverage to employers against claims made by employees.”

WHAT DOES EPLI COVERAGE COVER?

Employment Practices Liability Insurance policies typically extend coverage to the following:

  • Wrongful Termination
  • Sexual Harassment
  • Wage-Related Claims
  • Claims of Unequal or Unfair Pay
  • Discrimination Claims (i.e. age, race, gender, sexual orientation)
  • Third-Party Claims

According to Amtrust Financial, the below are also common employer missteps that may be covered:

  • Failure to Hire or Promote
  • Libel, Slander, Defamation of Character, or Invasion of Privacy
  • Wrongful Infliction of Emotional Distress
  • Wrongful Discipline or Demotion

WHY IS EPLI IMPORTANT?

According to Advisen, only 32% of all construction firms with 50 to 200 employees and 20% of all firms with fewer than 50 employees have stand-alone EPLI coverage.

This statistic is low and frightening as the costs associated with EPLI claims can be shocking.

EPLI claims can be detrimental to businesses of all sizes and types. EPLI helps protect against many kinds of employee lawsuits, which is why it’s important for businesses to invest in coverage.

WHAT INDUSTRIES NEED EPLI?

The fact of the matter is that some industries are more susceptible to these types of claims than others. These industries include:

  • Healthcare
  • Professional services
  • Restaurant and food services
  • Retail, and
  • Manufacturing

An additional industry that should consider EPLI is construction. Continue reading to find out why.

DOES YOUR CONSTRUCTION BUSINESS NEED EPLI?

The answer is most likely ‘yes.’

The construction industry is known for its rapid growth and often accompanying layoffs, which can lead to a particular job being eliminated or terminated.

Additionally, due to the fluctuating nature of contract work, contractors may find themselves vulnerable to wrongful termination and potential discrimination claims.

Employees also often introduce post-employment wage and hour claims, which stem from improper overtime and breaks.

Lastly, when contractors work, they often come into contact with the public which can lead to remarks or actions that other people find objectionable. It is difficult for employers to prove these allegations due to not being present for the incidents in question.

HOW TO MINIMIZE EPLI CLAIMS AS AN EMPLOYER

So, how can an employer minimize expensive EPLI claims against their construction business?

Most importantly, study and adhere to the guidelines established by the Equal Employment Opportunity Commission (EEOC). Some of these guidelines include:

  • Clearly define employment practices and policies
  • Schedule training workshops
  • Keep your eye on your workplace
  • Let your workforce know employment practices violations will not be tolerated
  • Maintain an “open door” policy

A Final Word

EPLI is important for any business, but it’s especially important for construction companies. If you’re in the construction industry, make sure you have the right EPLI policy in place to protect your business from employment-related lawsuits.


As discussed above, hiring employees carries inherent risks. Because of this, we’ve put together a few tips on how to reduce your risk when hiring, in California specifically.

Don’t Create Your Own Labor Shortage

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Since even before the pandemic, millions of Americans have left their jobs. In fact, we have more than three million fewer Americans participating in the labor force today compared to February of 2020, according to the U.S. Chamber of Commerce.

So, how can you ensure you don’t create your own labor shortage as a business owner? Read on for our best tips.

Create a Strong Company Culture

What are the signs that a business has great company culture? High employee retention, transparent communication, employee benefits, employee recognition, opportunities for development
 The list goes on.

But how do you get to this level? To create a strong company culture, you should consider the following:

  • Determine what this culture looks like
  • Ask for employee input and LISTEN to what they have to say
  • Hire for culture
  • Encourage (and model!) work-life balance
  • Make sure employees know your expectations regarding culture

Of course, this is a shorthand list of things you can do. Building a strong company culture is crucial to ensuring you maintain the workforce you do have, and don’t create a labor shortage for your own business.

Ensure Your Workplace is Safe

Your workplace, regardless of your industry, needs to be safe. This includes big-ticket items like following any regulations and codes as well as small things like ensuring rugs are adhered to the floor to prevent tripping, for example.

Ensuring your workplace is safe will help increase employee retention and lower your risk of receiving workers’ compensation claims against your business. It’s a win-win.

Read on to learn more about rising workers’ compensation claims and what you can do.

Provide Growth Opportunities for Employees

What opportunities are you providing to help your employees grow? Are you paying for outside training? Seminars they’d like to attend?

Increased employee retention is one of the best benefits of a successful learning and development (L&D) strategy. In fact, according to a LinkedIn study, “94% of employees would stay at a company for longer if the business was investing in their career development.”

Implementing learning and development opportunities for employees can help:

  • Retain top talent
  • Increase job satisfaction and morale
  • Improve productivity, and
  • Earn more profit


In fact, research shows that “businesses that have actively interested and dedicated employees see 41 percent lower absenteeism rates, and 17 percent higher productivity.”

Consider: What training and development might your employees benefit from?

Invest in the Right Insurance Coverage

Of course, we wouldn’t be who we are without mentioning insurance. Having the proper coverage for your business makes for safer operations and employees.

Although the types of insurance your business needs vary on a case-by-case basis, most businesses need the following types of coverage at a minimum:

  • General Liability Insurance
  • Workers’ Compensation Insurance
  • Commercial Property Insurance
  • Cyber Liability Insurance
  • And more

Read on to learn how much business insurance should cost.

Focus On What Matters Most

Our biggest overarching rule is this: Focus on what matters most. Employee retention is all about making your workforce feel special, valued, and safe. Take some time today to think about how your specific business might achieve this.

Interested in learning more about the labor shortage? Read on to see how the California labor shortage is affecting the construction industry.

OSHA’s Consultation Services: What You Need to Know

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The Occupational Safety and Health Administration (OSHA) is a government agency whose mission is “to ensure safe and healthful working conditions for workers by setting and enforcing standards and by providing training, outreach, education and assistance.”

Congress created OSHA with the Occupational Safety and Health Act of 1970.

Over the years, OSHA has continued to stay dedicated to its mission, which has resulted in the creation of its ‘On-Site Consultation Program.’ Here’s more on OSHA’s consultation services and how these services can help high-risk businesses.

OSHA’s On-Site Consultation Program: What Is It?

OSHA’s Consultation Program offers safety and health assistance to employers through on-site visits. These services help prevent occupational injuries and illnesses within a business.

Who Conducts On-Site Visits?

According to their website, “consultants from state agencies or universities work with employers to identify workplace hazards, provide advice for compliance with OSHA standards, and assist in establishing and improving safety and health programs.”

Who are these Consulting Services Offered to?

According to their website, OSHA “offers no-cost and confidential occupational safety and health services to small- and medium-sized businesses in all 50 states, the District of Columbia, and several U.S. territories, with priority given to high-hazard worksites.”

How Does OSHA Consulting Help Your Business?

OSHA’s on-site consultation program helps your business by addressing hazards in the workplace.

Additionally, during an on-site visit OSHA consultants:

  • “Suggest general approaches or options for solving a safety or health problem
  • Identify kinds of help available if you need further assistance
  • Provide you a written report summarizing findings
  • Assist you to develop or maintain an effective safety and health programs
  • Provide training and education for you and your employees”

These steps help reduce injury and illness rates, lower workers’ compensation costs, improve worker morale, and increase productivity.  As well as helping to identify, analyze, and remove hazards, use safer work practices, improve safety programs, strengthen safety culture, and provide training assistance, according to the California Department of Industrial Relations.

Best of all, OSHA’s on-site consultation program is free of charge. Throughout this consultation, OSHA does not issue citations or propose penalties for violations, and it is confidential. “Your name, your firm’s name, and any information you provide about your workplace, plus any unsafe or unhealthful working conditions that the consultant uncovers, will not be reported routinely to the OSHA inspection staff,” according to OSHA’s site.

What Does a Consultation Include?

On-site visits might include:

  • Hazard Assessments via walkthrough (find and fix hazards)
  • Industrial Hygiene Surveys (i.e. noise surveys, chemical exposure assessments)
  • Safety and Health Program Assessments
  • Workers’ Training and Education
  • And more

Interested in learning more about OSHA’s on-site consultation program? Download their small business handbook, which is chock full of information and self-inspection checklists.

Payment and Performance Bonds Explained

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Payment and performance bonds

Payment and performance bonds
 The two are an odd pairing—unique in their own way yet dependent on each other.

Although payment and performance bonds have their differences, both are essential in protecting yourself in the world of insurance. Let’s explore the differences below.

Payment Bonds

What is a payment bond? Simply put, a payment bond guarantees payment for subcontractors and payment for materials once a project is completed.

Payment bonds are most commonly seen in construction. Payment bonds are a type of surety bond and are required for most state projects based on the Miller Act.

Surety Bonds

What is a surety bond? 

A surety bond is a contract where one party (the surety company) guarantees the performance of certain obligations in a contract of the second party (the principal or the insured) to a third party (the obligee).

When Do You Need a Surety Bond?

Surety bonds are needed for most licenses in the state of California and other states as well. Some examples of who might need a surety bond include:

  • Contractors
  • Real estate companies and agents
  • Financial institutions
  • Janitorial staff

Why Do You Need a Surety Bond?

Licensed bonds are required in many states to do business and are put in place by the state to protect consumers.

The insured, or principal, purchases these bonds in an amount prescribed by the state to pay the obligee (the state), in case there’s a claim against somebody’s license.

The Miller Act

As previously mentioned, surety bonds are required for most state projects based on the Miller Act.

The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) to explain how payment bonds protect subcontractors and suppliers.

The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act.

The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.” 

There are legal consequences for breaking a contract through the Miller Act.

The GSA expands: “Failure by a contractor to pay suppliers and subcontractors gives such suppliers and subcontractors the right to sue the contractor in the U.S. District Court in the name of the United States.”

Performance Bonds

The main difference between payment and performance bonds is that a performance bond ensures that the employer is satisfied with the job.

While both payment and performance bonds are surety bonds, performance bonds are visible in industries outside of construction.

A performance bond, according to Investopedia, “ensures the completion of a project.” A performance bond covers the ability of the contractor to perform and finish the job as per contract requirements.

If the contractor doesn’t perform, the contract bond kicks in and helps to pay for the completion of that performance.

A performance bond involves three parties:

  • The principal: The primary contact in the performance bond; responsible for performing the contract
  • The obligee: The person receiving the obligation
  • The surety: Responsible for making sure each party complies with the performance bond obligations

A Final Note

If these bonds are used and there’s a claim on a bond, the contractor who purchased the bond has to pay that back.

This considered, surety companies look for strong financials in a company, including assets, lines of credit, and letters of credit.For more information, watch this video about surety bonds and contract bonds. There, Brenda Jo Robyn, founder of Competitive Edge, lays it all out on the table in a way that’s easy to understand.

How Small Businesses Fall Victim to Cyber Attacks

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Cyber attacks are on the rise—and no business, big or small, is immune to the devastating financial loss that a cyber attack can have. So, let’s discuss a few aspects of cyber attacks to look out for, including:

  • What is phishing?
  • Why is it a problem?
  • Why are small businesses targeted?
  • How can your business prevent becoming the victim of a cyber attack?

Let’s dive in.

What is Phishing?

Phishing is an ever-growing concern defined as the “technique for attempting to acquire sensitive data, such as bank account numbers, through a fraudulent solicitation in email or on a website, in which the perpetrator masquerades as a legitimate business or reputable person.”

According to Brenda Jo Robyn, founder of Competitive Edge Insurance, phishing is “any activity that compromises your organization’s security.”

For more on phishing, read our article: “Why Is Phishing the #1 Thing Killing Small Businesses?”

Why is Phishing a Problem?

Let us provide an example of the dangers of phishing.

On February 5, 2021, according to The Pew Charitable Trusts, “a plant operator for the city of about 15,000 on Florida’s west coast saw his cursor being moved around on his computer screen.”

The cursor continued to move, “opening various software functions that control the water being treated [and boosting] the level of sodium hydroxide—or lye—in the water supply to 100 times higher than normal.”

If you didn’t know, the consequences of this breach could have been deadly if not caught immediately, as lye poisoning can result in:

  • Burns
  • Vomiting
  • Severe pain
  • Bleeding

While most cases might not involve the extremes of lye poisoning, this example shows the severity of phishing today. As a result, governments, states, businesses (big or small), and individuals should act accordingly to strengthen their cybersecurity efforts.

Why Do Data Thieves Focus on Small Businesses?

The consequences of a cyber attack on a small business are particularly severe. 60% of small businesses that have been hit by a cyberattack end up shutting down within six months of the attack.

Despite the irreversible aftermath of falling victim to a cyber attack and the fact that 43% of online attacks are now aimed at small businesses, CNBC reports that only 14% are prepared to defend themselves.

Interested in some more statistics?

Cyber attacks are not only extremely expensive to recover from but they also damage your business’s reputation and productivity, and can even be dangerous in the event of personal data being stolen.

This is why it is crucial to protect your small business from cyberattacks. But how can you protect yourself? What can the Florida plant case study teach us?

How Can You Prevent Phishing?

Luckily, there are measures you can take to prevent phishing as a business owner. Let’s discuss some options.

Training

  • Training your employees: To be vigilant; educate them on common phishing traps, email scamming tactics, and how to send data securely (In the Florida case study mentioned earlier, the employee who noticed the breach reported it immediately).
  • Training IT: To know what to look for

Be sure to document your training and review it on a weekly or quarterly basis with employees and staff.

Due Diligence

Ensure your business is conducting thorough, routine cybersecurity due diligence.

According to Security Scorecard, cybersecurity due diligence is “the process of identifying and addressing cyber risks across your network ecosystem.” Doing so provides “insights into potential gaps in network security so that they can be addressed before they are exploited by cybercriminals.”

For those who are interested in seeing where their business is in terms of safety, read on to learn how you can measure your company’s cybersecurity risk.

Have a Planned Crisis Response in Place

When it comes to cyber risk, there’s nothing worse than being ill-prepared. Of course, we couldn’t write about cyberattacks without mention of investing in a cyber liability insurance policy for your business.

A cyber liability policy might include:

  • Data Breach Coverage
  • Business Interpretation Loss Reimbursement
  • Cyber Extortion Defense
  • Forensic Support
  • Legal Support
  • Coverage beyond a General Liability Policy

As a small business, you must be prepared—because the consequences can be insurmountable. Interested in learning more about cyber insurance and why you need it? Read on in our article “Why Does My Business Need Cyber Insurance?”

What to Know About Changes in Cannabis Insurance

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The cannabis industry continues to grow every day. With this, comes a new space for industry coverage. In this article, we’ll discuss changes in cannabis insurance; including how the industry has evolved, cannabis business insurance challenges, and how to insure your high-risk business properly. Let’s dive in.

How Has the Cannabis Industry Evolved?

As we previously mentioned, the public’s reaction to cannabis has shifted time and time again throughout history. Even just ten years ago, one might’ve laughed if you told them that in 2020, cannabis sales would hit an all-time record of $17.5 billion. In fact, from just 2019 to 2020, the industry experienced a 46% increase in sales, according to Forbes.

To put things in perspective, according to PropertyCasualty360, cannabis sales may reach up to $37 billion by 2024, which means “the U.S. legal cannabis market would still outpace annual craft beer sales and generate more revenue than toothpaste, hard seltzer, and the NBA combined.”

The decision of many U.S. states to have made cannabis legal today is still controversial on some level. 

While many people turned their noses up at cannabis being made legal, it’s interesting to remember that the drug actually “enjoyed a 5000 year history as a therapeutic agent across many cultures,” until the Marijuana Tax Act of 1937, which prohibited its use and sale.

The cannabis industry continues to evolve every day. 

With the now booming cannabis market, comes a new space for industry coverage. There are unique cannabis business challenges, which we will discuss below. If you’re interested, however, in the difference between cannabis and hemp insurance, read on here.

Cannabis Insurance

Challenges with Cannabis Insurance

One particular challenge of the emerging cannabis industry is properly insuring your cannabis business. According to Yahoo Finance, cannabis insurance “help[s] strengthen and legitimize marijuana-focused businesses. It protects them against:

  • Crime
  • Vandalism
  • Property damage
  • Other unfortunate events”

Insurance is essential to protecting any cannabis company as it minimizes liability and risk exposure. But that doesn’t mean it’s easy to find the right coverage.

“The good news is the cannabis insurance industry has come a long way in a short time,” says Ian Stewart, founder and chair of the national cannabis and hemp law practice at Wilson Elser.

“These days it is not so much about whether companies can obtain coverage, but more about what lines are available and the limits,” says Stewart. “The variety of insurance vehicles is expanding.”

These varieties include:

  • Property and casualty lines
  • General commercial insurance
  • Product liability

As the cannabis industry continues to grow, we gain a better understanding of how it works and it’s loss history.

More difficult coverage types to write for cannabis businesses, according to Stewart, include:

  • Employment
  • Cyber,
  • Errors and Omissions (E&O) policies
  • Specialty lines (i.e. crop coverage)
  • Auto policies (for companies who deliver cannabis products)

How to Insure Your Cannabis Business

Cannabis insurance falls into the realm of high-risk insurance. According to PropertyCasualty360, “insurers that provide coverage to cannabis businesses engaged specifically in selling marijuana can be criminally liable for aiding and abetting in the sale of marijuana or conspiring to violate the CSA — even when the business’s activity is legal under state law. Further, intrastate issues may also cause complications if marijuana is not regulated uniformly within a state.”

For these reasons, it can be more difficult to find proper coverage.


Legal cannabis companies require specific cannabis insurance expertise. Since the industry is still blooming, there are not as many experts as one would yet hope for.

The most important part of insuring your cannabis business is working with a knowledgeable insurance provider, one who understands the specific needs of your high-risk business. 

Depending on whether you’re a dispensary, cannabis manufacturer, cultivator, delivery business, physician, or so on, all of these branches face a different set of challenges, which, in turn, require different cannabis insurance policies.

These insurance policies, according to Embroker, might include:

  • General Liability
  • Product Liability
  • Commercial Property
  • Workers Compensation
  • Business Income Coverage
  • Cyber Liability
  • Errors & Omissions and Technology E&O
  • Crop Coverage
  • Commercial Auto
  • Cargo and Inland Marine
  • Loss of Income
  • The list goes on!

The steps to insuring your cannabis business can seem daunting. That’s why we recommend you enlist a trusted expert who has experience insuring this high-risk industry. This way, you can partner with someone who understands the specific needs of your cannabis business to create an effective risk management strategy.
Contact Brenda Jo and her team at Competitive Edge to learn more.

What’s the Difference Between a Surety Bond and a Contract Bond?

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The world of insurance can be complex—and for contractors, work can be dangerous, too. As a contractor, the question of what insurance you need to stay protected is likely to come up.

So, for starters: What’s the difference between a surety bond and a contract bond? Which do you need to stay safe?

Today, Brenda Jo Robyn, founder of Competitive Edge Insurance, is here on camera to give us the spiel; including the differences, benefits and risks, and what you need. Let’s dive in.

What is a Surety Bond?

There are three parties involved in a surety bond, including:

  • The surety company
  • The principal or the insured
  • The obligee

A surety bond is a contract where one party (the surety company) guarantees the performance of certain obligations in a contract of the second party (the principal or the insured) to a third party (the obligee).

When Do You Need a Surety Bond?

Surety bonds are needed for most licenses in the state of California and other states as well. Some examples of who might need a surety bond include:

  • Contractors
  • Real estate companies and agents
  • Financial institutions
  • Janitorial personnel

Why Do You Need a Surety Bond?

Licensed bonds are required in many states to do business, and are put in place by the state to protect the consumer.

The insured, or principal, purchases this bond in an amount prescribed by the state to pay the obligee (the state at this point), in case there’s a claim against someone’s license.

What is a Contract Bond?

A contractor performance bond is a written contract that guarantees the performance obligations under a contract.

Contractor performance bonds are used frequently in the construction industry but are also sometimes used in manufacturing and supply chains as well.

When Do You Need a Contract Bond?

The short answer: It depends! Contractors can be required to have a contract bond for different parts of the process when they’re bidding for a job, according to Brenda Jo.

What Is a Bid Bond? When Do You Need One?

Oftentimes, a bid bond is required to submit a bid for a project. Typically, these bids are in the public arena for states or cities. For example, the Department of Forestry.

“A bid bond lets this entity know that the contractor can provide a payment and performance bond should the job be awarded to them,” says Brenda Jo.

“If the contractor is awarded the project and the contractor decides that they cannot fulfill the obligation, the bid bond helps to pay for the difference in price that it costs to get a new contractor in.”

This leads to the next kind of bond couplings, which is the payment bond and the performance bond. Let’s discuss.

Payment Bonds and Performance Bonds

What is a payment bond? What about a performance bond?

A payment bond is a bond that guarantees payment for subcontractors and payment for materials.

A performance bond, on the other hand, covers the ability of the contractor to perform and finish the job as per contract requirements. If the contractor doesn’t perform, the contract bond kicks in and helps to pay for the completion of that performance.

infographic showing the difference between a surety bond and a contract bond

A Final Word

An important note: For all bonds mentioned, if they’re used and there’s a claim on a bond, the contractor who purchased the bond has to pay that back, says Brenda Jo.

This considered, surety companies look for strong financials in a company, including:

  • Assets
  • Lines of credit
  • Letters of credit

Surety companies look for anything that creates a picture that says you’re worthy of having a bond put into place—because if the bond is utilized and pays out, they need to know that the purchaser of the bond can pay that money back.

Bring in The Experts

At Competitive Edge Insurance, we work with insurance carriers across the country to place all types of business coverage. We are always seeking out new insurance companies to write hard-to-place and high-risk business insurance.

Don’t let cancellation dissuade you from finding comprehensive coverage. We can help! Learn more by connecting with our team today.

Additionally, for those interested in learning more, choose between our articles on the key differences between general contractors and construction managers and the difference between payment and performance bonds.

Understanding the Basics of Workers’ Compensation

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Workers’ compensation is an important part of business for any employer. Having workers’ compensation insurance helps protect both employers and employees, and is required by most states.

Workers’ compensation insurance can help recover an employee’s lost wages while they recover from a work-related injury or illness or even support family members if an employee is killed in a work-related accident. This type of insurance can be complex, so we’re here to help you in this article: “Understanding the Basics of Workers’ Compensation.”

What is Workers’ Compensation?

“Workers’ compensation is a form of insurance, paid by employers, providing wage replacement and medical benefits to employees who are injured during the course of working for the insured.”

These wages and benefits are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

What Does Workers’ Compensation Cover?

Specific workers’ compensation coverage laws vary depending on your state. The most common compensation requires workplace injury insurance to include:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 
Workers Compensation Basics

Who is Required to Purchase Workers’ Compensation Insurance?

Does every business need to purchase workers’ compensation insurance? The need for insurance falls on a state-by-state basis. 

In California, for example, “all employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law,” according to the California Department of Industrial Relations.

“State rules are typically based on the type of business entity you have (sole-proprietorship, partnership, LLC, corporation) and your total number of part-time and full-time employees. In most states, one or more employee will trigger coverage requirements,” according to Workers Compensation Shop.

Does My Small Business Need Workers’ Compensation?

Short answer? Most likely. Insureon tells us that for almost all businesses in the United States, workers’ compensation insurance isn’t optional.

“Small businesses typically need a policy in place as soon as they hire their first employee. Even when not required by law, this policy provides important protection against medical expenses and employee lawsuits related to workplace injuries.”

Don’t worry—Competitive Edge can help your small business find insurance.

If I Am a Contractor, Do I Need Workers’ Compensation?

When you’re a contractor, your work can take you anywhere! This is exciting, but also opens up a window of opportunity for injury or illness—which is a much heavier financial burden to carry when you’re flying solo.

Think about what an injury on the job might mean for your future or work. By investing in workers’ compensation, you can protect yourself from the exciting, but risky unknown that lies ahead.

For more on workers’ compensation for independent contractors, please read on here.

Why Is Everyone Talking About Workers’ Compensation Now?

With the arrival of COVID-19, many people wondered if the contraction of COVID-19, and thereafter the time necessary to quarantine at home, was compensable under state workers compensation acts. 

The answer to that question still remains unclear but is a topic of discussion. 

According to the National Council on Compensation Insurance (NCCI), “workers compensation laws provide compensation for ‘occupational diseases’ that arise out of and in the course of employment, many state statutes exclude ‘ordinary diseases of life’ (e.g., the common cold or flu).

“There are occupational groups that arguably would have a higher probability for exposure such as healthcare workers. However, even in those cases, there may be uncertainty as to whether the disease is compensable.”

Where Can I Get Workers’ Compensation Insurance?

From the State Compensation Insurance Fund (State Fund) or a licensed insurance company. In some cases, employers might be able to self-insure.

How Much Does Workers’ Compensation Insurance Cost?

The fast and hard answer: It depends! Rates can vary from carrier to carrier and from state to state. By comparing rates and working with a trusted insurance professional, like our team at Competitive Edge, you can find a carrier that best fits your needs.

Although cost is a big factor to consider, it’s also important to look at:

  • Services provided
  • What industry the carrier is in
  • Access to doctors
  • Access to the claims adjusters

What Happens if I Get Caught without Workers’ Compensation?

For employers who think the money saved by not investing in workers’ compensation is worth it, perhaps it would be beneficial to detail the extreme consequences of not having workers’ compensation.

Failing to have workers’ compensation is a criminal offense.

In fact, section 3700.5 of the California Labor Code makes it “punishable by either a fine of not less than $10,000 or imprisonment in the county jail for up to one year, or both.”

“Uninsured employers can be levied a fine of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000.”

The bottom line: You can face up to $100,000 total if you are an employer who is caught without workers’ compensation insurance!

Employers who claim to have been “unaware” of the need for holding workers’ compensation insurance still face the consequences. Although obtaining workers’ compensation can be expensive, especially for those employers who frequently have claims made against them, there is no “savings” worth not having workers’ compensation insurance.

At Competitive Edge Insurance, we believe the first step is for your business to show us under the hood so we can help build your case to the carrier to get the right coverage at the best price based on your real-world conditions.

For more on how to prepare for employee claims and what you need to know about workers’ compensation for independent contractors, please read on here.

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Competitive Edge Insurance

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