Risk of Not Having Workers Comp in California

Most new businesses and even existing California businesses in today's world are looking for ways to reduce costs anywhere they can.  Typically, insurance hits the radar and in a moment of weakness, some companies may look at their California Workers Comp budget.  While it's okay to get the lowest price available for your company, going without California worker's comp insurance just isn't worth the risk.  It's also illegal.  Let's take a look at the risk you are avoiding by having qualified Workers Comp coverage in California and they we'll address the genuine need to get the best rate from the market.

As we mentioned above, having Worker's Comp for your California company is the law.  Operating without worker's comp insurance in California when required (1 or more employees or any number of employees for roofers), is a misdemeanor and can result in up to $10,000 penalty and/or up to 1 year in a county jail.  The State can further impose up to $100,000 in fines for companies that violate the law to have adequate Worker's Comp insurance.  If the California Division of Labor Standard's Enforcement finds your company operating illegally without Workers Comp, it can issue a stop order and prevent your company from using employee labor until Workers Comp is secured.  Violation of the stop order can result in jail time and penalties as well.  Further fines can be imposed per employee either by the same Division or if your company is found in violation of the California Workers Comp law while in front of the California Workers Comp Claims Board per employee up to a maximum of $100,000.  Needless to say, the above reasons alone justify the purchase of California's Workers Comp but legal requirements and penalties are not the only risk associated with having no Workers Comp coverage in California.

The second big risk of not carrying California Workers Comp is the risk that it inherently addresses...that of costs associated with worker's injuries and illness arising from workplace activity.  Where as the above legal liability has significant yet fixed amounts, true worker's comp liability has no fixed amount and it can quickly bankrupt your company and potentially, yourself.  A simple ACL repair can run $10-15K not to mention resulting issues and costs only go up from there.  In today's litigious California workplace environment, it makes no sense to bear this risk as a company in addition to the legal ramifications. 

Many Government and Private companies that you might do business will require that you have Workers Comp California coverage in force in order to bid or perform services for them.  Aside for legal and liability issues, you may lose out on significant business for your company due to a lack of required coverage.  You want to make sure that you have the Workers Comp coverage immediately upon hiring your first employee so you do not lose this potential business.

We've looked at some of the risks of not carrying California Workers Comp but that doesn't mean you should just purchase whatever policy is first offered you (unless you have to go with State Fund due to age of company, claims experience, and/or type of business).  Let us run multiple quotes to see what your company might qualify for.  This way, you can address the core risks above at the lowest possible cost and get on with running your business with peace of mind.

Related Pages:

Introduction to Workers Comp insurance in California
Getting the best rate for workers comp coverage


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