Workers’ Compensation for Auto Dealers
Companies with employees are often mandated by their state’s laws to carry Workers’ Compensation coverage. Auto dealerships without this required coverage will potentially have their license suspended or have other disciplinary action taken against the dealership.
Workers’ Comp is a form of insurance that covers medical costs, lost wages, vocational rehabilitation, and more, as a result of a work-related injury or illness.
What is Workers’ Comp?
The coverage is called Workers’ Compensation, but is actually broken into two parts: Workers’ Compensation is Part A and Employer’s Liability is Part B. Part A compensates the employee for injury or illness that occurs while on the job. Part B protects the employer in the event an employee feels the employer was negligent, causing an injury/illness, and decides to sue them.
Car dealers with a Workers’ Comp policy have reassurance that if an employee gets ill or hurt due to work, they will be able to get the medical care they need and return to work healthy. It also prevents most civil litigation from being pursued against the dealership.
Employees can go to work knowing that, should a major injury or illness occur while on the job, their medical costs will be covered by the workers’ compensation insurance carrier. In more serious cases, workers’ comp also pays benefits to worker’s families if they are killed during a work-related accident.
Scenario 1: An employee slips while in the service area of the dealership and breaks an ankle. The medical bills for the injury sustained will be covered by the dealership’s workers’ comp policy.
Scenario 2: An employee’s spouse finds out the employee was injured while on the job and the spouse then must take time off work to assist their partner. The spouse can file a lawsuit against the spouse’s employer for unpaid time off as a results of the employee’s injury.
What Are the Workers’ Comp Limits?
Workers’ Comp (Part A) has no set limits. The Workers’ Compensation Board in each state determines the amount to be paid out to the injured or ill employee. The Board looks at the employee’s weekly salary and severity of the injury/illness to decide on the amount of benefits the employee will receive.
Employer’s Liability (Part B), has set limits. The typical limits are $100,000 per occurrence, $100,000 per employee, and $500,000 policy limit.
North Dakota, Ohio, Washington, and Wyoming, are exempt from the Employer’s Liability limits. These four states listed are monopolistic, meaning employers are required to purchase the coverage from the state’s workers’ compensation fund.
How Much Will a Policy Cost?
Workers’ Comp Policies cost between 1% to 6% of the total payroll amount. It also varies based on location, the company’s work-related injury history, etc. Rates are higher in California and lower in Texas, with most other states falling somewhere in the middle.
|State||% of Total Payroll Amount*|
|All Other States||2-3%|
*Prices shown are based on several factors including, but not limited to, classification, payroll, experience modification and location. Rates do not constitute an offer of coverage and are subject to change at any time. Rates may fall outside average ranges shown here due to exceptional risk factors.
What Doesn’t Workers’ Compensation Cover?
An employee’s medical costs or lost wages due to an injury/illness that occurred while off the job would not be covered under Workers’ Comp.
Many are under the impression that general liability or garage liability insurance will cover employee injuries, but that is not the case. General or garage liability protects against third-party (customer) injuries.
Benefits of a Strong Partnership
Jet and ADP have partnered together to provide workers’ compensation insurance and payroll services to auto dealers at low prices with great coverage. It is an asset to have payroll services and workers’ comp handled by the same insurance provider since workers’ comp rates are directly related to employee payroll.
|Traditional Comp Carriers||Jet Comp Program|
|Premium based on estimated annual payroll||Premium based on actual payroll|
|High risk of additional premium due||Less risk of under or overpayment|
|25-100% deposit required||No deposit required*|
|Mailing checks with risk of late payment||No writing checks|
*Mandatory state assessment fees may be required.