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Arizona Workers’ Compensation insurance

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Is Workers’ Compensation insurance required in Arizona?

Are you an Arizona business owner with one or more part-time or full-time employees? If the answer is yes, you’re required by law to have workers’ compensation insurance. 

Under Arizona workers’ compensation law, employees are entitled to receive benefits for job-related injuries and occupational illnesses, no matter who is responsible, as long as the employee didn’t intentionally cause the accident.

After purchasing a policy, you must post a notice at your business — typically in an employees-only area — that shows you have coverage. 

Unlike healthcare insurance, you can’t share the cost of workers’ comp insurance with your employees. You’re responsible for paying 100% of the premium, which can be paid monthly or annually when you purchase coverage with Next Insurance

Benefits of having Arizona Workers’ Comp insurance

More than 90,000 workers’ compensation claims are filed in Arizona every year1. Having proper coverage not only protects your workers, it protects your business from the impact of potential claims. Workers’ comp insurance helps pay for medical expenses and lost wages after work-related accidents if you or an employee get hurt. 

For example, if one of your employees, slips, falls and breaks a leg, your policy can help pay for the employee’s medical bills and a portion of their lost wages if they’re unable to return to work for an extended period of time.

If one of your employees is injured on the job, you have 10 days to report it to your insurance carrier and the Industrial Commission of Arizona (ICA).

 

What is the penalty for not having Workers’ Compensation in Arizona?

Unlike most other types of insurance, you could face fines if you have employees and don’t have an active workers’ comp policy in Arizona. That’s because it provides coverage that offers important protection for the workers who are helping your business.

If you have a lapse in coverage, you also run the risk of an employee lawsuit if someone gets hurt. In that case, you would be paying for related expenses out of pocket.

Without coverage, your employees can either file a lawsuit against you or file a claim with the ICA if they get hurt on the job. If they file a claim with the ICA, you could be responsible for paying the injured worker’s medical expenses and lost wages, and an added penalty of 10% of that amount or $1,000, whichever is larger. 

Not worried because you’re in a low-risk industry? Even if no claims are filed against you, the ICA can order you to shut down your business until you have proper coverage. And you could face a fine of $1,000 for being uninsured. 

If the ICA finds that you’re uninsured twice within five years, the fine increases to $5,000, and it goes up to $10,000 the third time you’re uninsured in five years.2 

Even if the chances of your workers getting sick or injured are low, the benefits of having a policy outweigh the risks of not having one. Not only does it protect the health of your employees, it helps protect your bottom line.

Who is exempt from Workers’ Compensation in Arizona?

There are more than 550,000 small businesses in Arizona, and most of them have more than one employee.3 However, not all of them have workers’ comp coverage due to a few exemptions. 

If you’re a sole proprietor, you don’t need to maintain workers’ compensation coverage for yourself. Although, you may want to consider it, in case you get hurt at work. For example, if you’re an interior designer and hurt your back moving furniture, a workers’ comp policy may help pay your medical bills while you’re recovering.

You don’t need workers’ comp insurance if you only work with independent contractors who aren’t employees of your business. And you don’t need to maintain coverage for domestic helpers who work in your home.

 

What does Workers’ Compensation cover in Arizona?

Arizona workers’ compensation insurance helps pay for expenses related to workplace injuries, including:

  • Medical expenses
  • Lost wages
  • Vocational training if you’re unable to perform your previous job
  • Permanent disability benefits
  • Death benefits

Coverage is available for acute injuries, such as falls, and injuries that may gradually worsen over time, such as carpal tunnel.


Medical claims 

For a medical claim, your insurance provider pays only for medical expenses, such as treatment and prescriptions. It doesn’t provide compensation for lost wages. All medical bills are paid up to the policy limit until the doctor releases the patient from treatment.

 

Time-lost claims

When a time-lost claim is filed, the insurance company pays for medical expenses and lost wages if the employee has to miss more than seven consecutive days of work because of their injury or illness. 

If the employee misses 8-13 days of work, they won’t be compensated for the first seven days. But if they miss more than 14 days, they’ll be compensated for all time missed beginning on the date of the injury. The employee will receive 66% of their monthly pay up to a maximum of about $3,2594 for as long as they’re actively receiving treatment from a doctor.

When you purchase coverage with Next Insurance, we strive to make claims decisions within 48 hours so you can move forward and get back to focusing on your business.

 

Permanent disability benefits

If an employee’s condition stabilizes but they haven’t fully recovered, they may be eligible for permanent compensation based on the type of injury they sustained. 

Under Arizona workers’ compensation laws, compensation injuries ranges from 50% to 75% of the employee’s average monthly wage. The amount and length of time a person can receive benefits varies based on the injury.  

If they’re able to work but earn less than what they were earning before they were injured, they’ll receive 55% of the difference between their previous average monthly wage and what they’re estimated to earn.5

 

Arizona Workers’ Comp death benefits

If an employee dies because of a job-related injury or illness, workers’ compensation covers up to $5,000 in burial expenses. Plus, surviving dependents will receive up to 66%6 of the employee’s average monthly wage.

 

How much does Workers’ Comp insurance cost in Arizona?

Many factors affect the cost of coverage. Arizona workers’ compensation rates vary based on: 

  • The industry your business is in
  • How many employees you have 
  • The amount of risk you and your employees are exposed to
  • Your insurance claims history 

If you have a business in an industry where work-related accidents are more common, you’ll likely pay more than a business owner with a business in a lower risk industry.

 

How to apply for workers’ compensation in Arizona

Next Insurance offers a painless and seamless option to quickly get the workers’ comp coverage you need. 

After you complete your online application, we’ll provide you with your coverage options. Select the policy that’s right for, pay your premium and get immediate access to your certificate of insurance. The whole process only takes about 10 minutes. 

We’re 100% dedicated to small businesses and the self-employed. If you have questions, our licensed U.S.-based insurance advisors are ready and waiting to help.

 

Start your instant quote today.

Other business insurance policies to consider

Workers’ compensation can help protect your business from expenses related to workplace injuries and illness, but it’s not the only type of protection you need. Here are three other types of insurance you may want to consider:

 

General Liability insurance

General liability insurance is typically the first type of insurance business owners buy. It can help protect your business if someone accuses you of causing an injury or damaging their property. If you are a contractor or own a cleaning business you can add tools and equipment insurance to protect your gear.

 

Professional Liability insurance (E&O)

Professional liability insurance covers you if a customer accuses you of making a mistake that adversely affects their business.

 

Commercial Auto insurance

Commercial auto insurance is similar to your personal auto insurance. But instead of covering your personal vehicles, it covers vehicles used for your business.

 

Resources

  1. https://www.azica.gov/sites/default/files/media/2018%20Annual%20Report%20-%20Final_0.pdf
  2. https://www.azica.gov/sites/default/files/migrated_pdf/Claims_FAQs_WorkersCompensation.pdf
  3. https://www.sba.gov/sites/default/files/advocacy/2018-Small-Business-Profiles-AZ.pdf
  4. https://www.azica.gov/claims-amw-statutory-maximum-information-page
  5. https://www.azica.gov/sites/default/files/migrated_pdf/Claims_InjuredWorkerHandbook_2016.pdf
  6. ttps://www.azleg.gov/viewdocument/?docName=https://www.azleg.gov/ars/23/01046.htm

 

FAQ

How do I get a Certificate of Insurance?
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We provide you unlimited certificates of insurance, free of charge. Once you've purchased a policy, log in to our website to get proof of insurance or add an Additional Insured. In most cases, you'll get your certificate within minutes. Otherwise, we'll email it within one business day.
Can I add to or change my coverage?
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If you’ve expanded your business and need coverage for more kinds of work, please let us know! An agent will go over your new operations and next steps with you and in most cases, we’ll be able to set you up with a new policy on the same day (so there will be no gaps in your coverage). Unfortunately though, we can’t remove any exclusions from the policy. So if you see your operations listed in our exclusions section, we’re very sorry, but our policy isn’t going to be the right fit for you just yet.
How does Live Certificate work?
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When you login to your account at the Next Insurance website, you’ll see an option to “Share Proof”. Clicking that will give you an option to either put in an email address and have us send your certificate, or copy a link which you can send to anyone you like that will take them to your Live Certificate.
How long will it take to get my policy after I buy?
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You will be receive your policy documents via email within one business day of purchase.
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