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Workers' Compensation Insurance Coverage

Workers’ Compensation

Your gross payrolls are reviewed to determine your premiums for Workers’ Compensation insurance coverage. Gross payroll includes total remuneration for services performed, including:

  • Wages
  • Overtime (straight time portion)
  • Bonuses
  • Commissions (including 1099 commissions)
  • Holiday and Vacation Pay
  • Sick Pay (except 3rd party reimbursements)
  • Incentive Plans
  • Piece Work
  • Auto Allowances (except expense reimbursements)
  • Housing Allowances (for certain class codes)
  • Savings Plan (401 K) Employee Contributions

Overtime Earnings Records
Earnings records for each individual should be organized to include overtime payments, the employee’s job classification and total remuneration. State law allows the premium portion of overtime payment to be excluded from total payroll for determining premiums.

Corporate Executive Officers, Partners, Sole Properties
When included in your policy, the earnings of executive officers, partners, and sole proprietors must be assigned to the specific classifications for the work they perform. State law specifies an earnings minimum and maximum for these salaries when determining premiums.

Records Required for Premium Auditing

The insurance company representative will look at the following records during the Premium Audit process:


  • Monthly and Quarterly totals
  • Work classification totals

Separate totals for clerical office, outside sales and any type of work performed Overtime by work classification classes.

Individual Earnings

  • Type of Work performed
  • Date of hire and/or termination
  • Gross pay totals, monthly and quarterly
  • Overtime totals, monthly and quarterly

Cash Disbursement and Job Cost Journals
Monthly totals by account, including:

  • Subcontractors
  • Casual Labor
  • Contract Labor

Verification and Balancing

  • Employers Federal Tax Return Form 941 (Quarterly)
  • State Unemployment Tax Return (Quarterly)
  • General Ledger
  • W-2 Statements
  • 1099 Statements
  • Financial Statements

Contractors License and Certificates of Insurance

  • License from each subcontractor
  • Certificate from each subcontractors

Special Note Regarding Subcontractors
If your company hires subcontracting companies which have not purchased Worker’s Compensation insurance for their employees, insurance laws require that your policy must provide coverage for theses employees should they suffer any work-related injury or illness while on your premises or job site. Even more important is the issue of a contractor ‘s license. State law demands that unlicensed subcontractors must be considered employees of the hiring contractor.

An agreement or written contract with the subcontractor releasing you from such Worker’s Compensation coverage would not be sufficient under the law. Even if the subcontractor may have accident and health insurance policies, you would still be liable for Worker’s Compensation coverage for the subcontractor’s employees while on your job. The answer is to obtain a copy of the subcontractor’s license and a certificate of Worker’s Compensation insurance from the subcontractors before any work begins. The insurance company representative will require this proof of insurance and insurance during the audit process. Otherwise, you must include the subcontractor’s payroll along with your payroll to determine your actual premium costs, which could be substantially higher.

Waiver of Subogation
When your policy includes a waiver endorsement it is necessary for you to maintain payroll records which accurately segregate, by classification, the remuneration of your employees while engaged in the work, described in the schedule.

Getting Started!

Looking for insurance? Need to file a claim? Fill out the contact form below and we will get back to you shortly.

By submitting this form you understand that NO COVERAGE IS BOUND OR AMENDED until you receive confirmation from an agency staff member in writing. If you have not received a response from us in writing within one business day, please contact Kallman Insurance Agency at 954-389-5897.

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