Workers' comp insurance protects both employers and employees in case an accident happens at the office or on a worksite. When work-related injuries occur, the insurance company helps cover injured workers' medical bills, lost wages, and legal expenses.
On the flip side, workers' comp prevents employees from suing you, the employer, if they get hurt on the job.
Companies in all industries and of various sizes are required to have workers' comp insurance. However, there are exceptions to the rules. Your company could qualify for a workers' compensation exemption.
Here's what you'll learn about workers' comp exemptions:
- What a workers' compensation exemption is
- Who is exempt from paying workers' comp insurance
- California's workers' comp exemption rules
- How to get a workers' compensation exemption
What Is A Workers' Comp Exemption?
A workers' comp exemption means you don't have to provide workers' compensation insurance or benefits to yourself or your employees. Each state has regulations that determine who needs to invest in workers' comp insurance and who doesn't. There are several reasons why you might be exempt from paying for workers' comp.
Who Is Exempt From Workers' Compensation Insurance?
Because states set their own workers' compensation laws, they also set their own rules about exemptions.
Here are some trends found in states' workers' comp exemptions laws:
- If your company has only a few employees, usually five or less, then you don't need to get workers' compensation insurance in most states. For example, in Florida, you are exempt from providing workers' comp insurance if you don't work in the construction industry and have three or fewer employees.
- Sole proprietors, corporate officers, and LLC (limited liability company) members can opt-out of carrying workers' comp insurance in many states, such as Colorado and Indiana.
- Independent contractors usually don't count as employees and therefore don't need to be covered by workers' compensation insurance in states like Mississippi and Rhode Island.
Check your local laws for specific regulations on who is and is not legally required to have workers' compensation insurance coverage.
What Are California’s Rules For Workers' Comp Exemptions?
In California, the general rule for workers’ comp is that all companies' employees must be covered in all industries.
However, small business owners are typically exempt if they're:
- Sole proprietors who have no employees other than themselves
- Officers of corporations with full ownership of their companies
The California State License Board, which regulates the state's construction industry, makes all companies show proof of workers' compensation insurance coverage with a certificate.
If a company has no employees and would prefer not to pay for workers' compensation insurance, they must apply for a certificate of election to be exempt.
How Do You Get A Workers' Comp Exemption?
To get a workers' comp exemption in most states, you must fill out a form online or mail it in. Some states have separate forms for companies in the construction industry and those that are not.
You can typically find these forms on the website of your state's labor agency or financial services department.
For example, in California, you can fill out an exemption form through the California State License Board's website.
Final Thoughts: Workers' Comp Exemption FAQs
In many states, all companies have to provide their employees and businesses with workers' comp insurance coverage. However, there are exceptions for small businesses, sole proprietorships, independent contractors, LLCs, and single-employee corporations.
Check your state's laws to see if you qualify for a workers' comp exemption.
If you don't qualify for an exemption, learn how Hourly can help you get your workers' compensation insurance on autopilot.
1. Introducing Yourself
Your introductory email needs to pack a lot of information into a small package. Try something like this:
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Hello Jane,
My name is John Doe and I work for ABC Agency, where we provide business insurance policies to many of Dallas' rockstar small businesses.
Congratulations on your new business, Jane's Bakery. Are you wondering if you have all the insurance you need? Or if your policies will really cover you in a pinch?
At ABC Agency, we pride ourselves on providing robust, comprehensive coverage options to companies like yours with flexible, pay-as-you-go plans.
Are you available this week to talk more about how we can help? I can help you find the most affordable rates and the best policies out there.
I look forward to speaking with you soon.
Cheers,
John Doe
2. Presenting a Quote
Once you've met with your potential client, a quick reply with their quote will get the ball rolling.
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Hi Jane,
Thanks so much for meeting with me this morning. I loved touring Jane's Bakery–I can still smell those delicious chocolate chip cookies baking! You have a great location, and I'm sure you're going to do great on Front St.
After reviewing my notes, I've pulled together an insurance quote for you (attached). I recommend a business owner's policy. A BOP includes several insurance products in one: liability, property insurance, and business interruption insurance. It offers robust coverage at a competitive price.
I'll call you in a few days to see what you think about this insurance plan. In the meantime, if you have any questions, don't hesitate to email me or call me at [phone number].
Again, thank you for your time today. I look forward to working with you in the future.
Cheers,
John Doe
3. Thanks for Purchasing a Policy
Gratitude is important! It's never a bad idea to thank your clients for their business.
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Hi Jane,
Thank you for choosing a business owner's policy with ABC Agency. We know it's so important to get the right coverage for your business, and we are honoured you've placed your trust in us.
We're excited to work closely with you, and our no. 1 goal is to make sure you're business is always protected.
Do you have any questions? We are here to help. Reach out whenever something comes to mind.
Thank you again for choosing ABC Agency to insure Jane's Bakery.
Cheers,
John Doe
4. Welcome Email
A welcome email helps clients feel like you're there to help–and can softly pitch other insurance products you offer.
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Dear Jane,
Welcome to the ABC family! We are thrilled to have you as a new customer and can't wait to meet all of your insurance needs.
As an independent insurance agency, we work with multiple insurance providers to find the best coverage options for all our customers. If you need any other type of insurance–like [include additional offerings unique to your agency, like life insurance, health insurance, home insurance or anything else]–we can help you too.
Do you want to discuss any of these policies?
Cheers,
John Doe
5. Introducing a New Product
A happy client may want to expand their business with you.
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Hello Jane,
I hope all is well with you and Jane's Bakery. I stopped in yesterday for a blueberry muffin and coffee, and they were delicious. I loved the hint of cinnamon in the muffin! Was that your idea?
I wanted you to be the first to know we are now offering commercial vehicle insurance to our policyholders. Auto insurance for your catering vans is super important since your personal car insurance won't cover them.
We're offering this insurance coverage solely to our current business clients at the moment and have some very competitive rates.
Would you like me to work up a quote for you?
As always, thanks so much for being a part of the ABC family.
Cheers,
John Doe
6. Asking For Referrals
Once your relationship is established and comfortable, let your clients help you grow.
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Hi Jane,
You've been a valuable member of the ABC family for two years now, and we so appreciate your business–not to mention the muffins you supply for our monthly meetings!
Because you are a valued policyholder, I wanted to ask a quick favour. I know you are active in the local Chamber of Commerce, and I'm hoping you might know some colleagues who would benefit from working with our insurance company.
Referrals are one of the most effective ways to connect with our community since people really trust their friends, family and colleagues. Is there anyone you'd recommend I speak with?
Remember that in addition to business insurance products, we offer everything from life insurance policies to pet insurance.
As a thank you for your help, we will send you an Amazon gift card of $100 when your referrals buy insurance from us.
Thanks so much for your help!
Cheers,
John Doe
7. Policy Renewal
If your client needs to renew their policy with you, send an email like this:
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Hi Jane,
I hope you're doing well! What a year it's been—from being listed as one of the top 5 bakeries in Dallas to being an official vendor for the city—you have so much to be proud of.
Just a heads up that your business owner's policy is up for renewal soon and will expire on June 15, 2023.
If you're still happy with the coverage, we can easily renew it for you.
Do you have some time to chat this week?
Looking forward to serving you again!
Cheers,
John Doe
