New Jersey, NJ Workers Compensation Insurance

Workers Compensation Benefits (NJ)
Workers compensation insurance provides 3 basic benefits. It pays for: a) all medical bills resulting from injuries sustained on the job. no deductible b) 70% of loss of wages after 7 days, c) settlement determined by the NJ WC Bureau, if death, dismemberment, or permanent, disability occurs.

When do you need to purchase Workers Compensation?
Whenever you hire employees you MUST provide workers compensation benefits. If you hire someone even for one minute, you must provide benefits. All permanent workers, temporary workers, day labors, illegal workers, etc. must be provided benefits.(yes, even illegal aliens!)

Corporate Officers / Corporations
Officers of a corporation are employees NOT owners!  All Corporate owners MUST have workers compensation in NJ

Electing Coverage
If you are an individual, partnership, LLC, or LLP, you can elect or reject coverage for yourself (proprietor) (employees are always included).  If you elect coverage, the cost is based on your reported business net income including wages, bonuses, commissions, etc.  If you are a corporatation, everyone is automatically included (including the corporate officer).  If you ELECT or REJECT coverage for yourself, you cannot change the policy until renewal.  Please choose carefully when purchasing the policy.

General Contractors
If you are a general contractor, you should carry workers compensation insurance even if all you subcontractors carry workers comp. If their policy cancels, the injured employee, owner / proprietor could seek benefits from you.

General Contractors MUST require all subcontractors to carry WC insurance, AND the proprietor MUST elect coverage

Sub-Contractors without worker compensation coverage, (or you don't collect their certificates of insurance), are considerred as employees and whatever you paid them will be picked up as payroll.  You will be charged for them accordingly.  When you hire subcontractors with workers compensation insurance, their certificate of insurance MUST state that they have elected coverage for themselves (for individuals, partnerships, LLC, LLP).  If the certificate does not state this, then your workers compensation insurance company may not recognize the insurance coverage and charge you for the payroll of the proprietor, owner, partner, LLC or LLP member.  This does not apply if they are a corporation.

Sub-Contractors
Subcontractors working for general contractors, large corporations, real estate management companies, or anyone that requires a certificate of insurance, MUST ELECT coverage for the proprietor / owner.

When certificates of insurance are issued, they specifically describe that the proprietor, owners, partner, LLC or LLP member has ELECTED or REJECTED coverage.

Cost of Workers Compensation Insurance
The determination of the WC premium is based on a rate established by the State of NJ Workers Compensation Bureau (every Jan1st) times the payroll. (plus a few small fees and/or credits, to keep things simple)

Audits
The policy is written with an estimated annual payroll.  At the end of the policy term, the company will contact you to conduct an audit to determine the actual amount you paid your employees (and proprietors if coverage has been elected).  An adjustment to your policy will be issued.  If you have a higher payroll than estimated, then the company will charge you an additional premium.  If you have a lower payroll than estimated, then the company will refund the overpaid premium.

Workers Compensation for States other than New Jersey
A New Jersey workers compensation policy is intended for New Jersey employees only.  a "regular" NJ employee is on who has NJ tax withholdings taken from his or her paycheck, workers in New Jersey, and lives in New Jersey.  If an employee is hired from another state and / or will primarily work in another state, then workers compensation for that state needs to be purchased; not NJ workers comp.

Employers Liability.  Workers comp. also has a part II a/k/a Employers Liability, that is rarely used.

Employers Liability is: Claims arising out of injury to an employee that are not compensable under the applicable workers compensation law frequently results in a lawsuit against the employer.  This type of suit is not covered under workers compensation insurance and is specifically excluded in general liability insurance.  To avoid a coverage gap, employers liability insurance is included as an additional coverage in workers compensation policies.   The following are som examples of claims that would be covered under employers liability insurance.

Suit is filed by an injured employees who is excluded under WC law.  For example, many states WC laws exclude farm labor and domestic employees.

Suit brought by an injured employee who is illegally employee.  In certain instances illegally employed minors or illegal aliens are not entitled to WC benefits and may elect to sue the employer under common law.

Suit brought by an injured employee's spouse claiming loss of consortium.  Under common law a man or woman is entitled to the "services" of his or her spouse.  These services include sexual relations, companionship, and help in performing household chors and maintenance.

Suite filed against the employer by a family member of the injured employee claiming a consequential bodilly injury.  For example, the spouse of a severely injured employee might upon learning of the injury suffer a haart attack, nervous breakdown, etc.