All businesses in Alaska with employees must have workers’ compensation insurance.1
Part-time and temporary employees must be included in a business’s workers’ comp coverage. However, coverage requirements do not apply to independent contractors and volunteers.
Getting workers’ comp coverage is important for two reasons. First, it’s required under the Alaska Workers’ Compensation Act. And second, workman’s comp insurance helps pay for a number of costs related to workplace injuries, such as:
No businesses are exempt from the workers’ compensation requirements. However, certain business owners and executives do not have to obtain Alaska workers’ comp insurance for themselves, such as:
These business owners still need to have Alaska workers’ comp coverage for any workers they employ. If you work as an independent contractor, some clients may also ask you to have coverage.
Even if you work for yourself, you might still want workers’ comp as it covers lost wages and medical bills after a workplace accident. Your personal healthcare insurance might not cover you.
There are a handful of other exceptions to the workers’ compensation requirements that are determined by specific employment circumstances, including:
Employers have the option to self-insure their workers instead of obtaining a workers’ compensation policy. In order to do this, they must undergo a qualification process through the Alaska Workers’ Compensation Board.2
To obtain a Certificate of Self-Insurance for workers’ compensation, Alaska businesses must meet a number of requirements, including:
Companies may submit an application if they meet the conditions for qualification. The application must include detailed documents and monetary commitments.
Workers’ compensation insurance helps pay for the costs of work-related injuries to employees and covered business owners, such as:
For example, let’s say you own a cleaning company and one of your workers slips on a wet floor and injures their back. Workers’ compensation coverage could help pay for medical care, lost wages while recovering and even travel to and from medical treatments if necessary.
There are four main categories for workers’ compensation income benefits in Alaska:3
The employee is unable to earn their full regular wage while recovering, but is still able to work in a different and/or reduced capacity.
The employee is unable to work for a certain period of time due to their injury.
The employee sustains a permanent impairment and compensation is determined by a doctor’s impairment rating.
The employee’s injury limits their ability to perform any type of work on a consistent basis.
Additionally, death benefits apply when an employee dies as a result of a work-related injury or illness. This may include coverage for funeral benefits and monthly payments to a spouse and dependents.
In addition to obtaining workers’ compensation coverage for all employees, the Alaska Division of Workers’ Compensation requires employers to do the following:
This state does not accept policies from other states to fulfill the requirement for workers’ comp. Alaska businesses must be insured by an in-state policy.
Out-of-state and foreign employers must obtain coverage for any labor that occurs in Alaska. All policies must be written by an insurer licensed by the Alaska Division of Insurance.
All contracting businesses must make sure any subcontractors working for them have satisfactory workers’ comp insurance. If a subcontractor is not insured, additional premiums can be added to the contractor’s policy to ensure coverage.
Ultimately, it’s the responsibility of the contracting business to make sure that all their subcontractors have the proper insurance.
If you want to minimize your liability, you can require all subcontractors to provide proof of insurance and hold on to those documents in case of an audit.
If your business fails or refuses to obtain the proper worker’s compensation insurance, you could be served with a stop work order.
A mandatory penalty of $1,000 per day applies if you violate the stop work order. Additional penalties of $10 to $1,000 per employee per day could be added to that fine.
The statute of limitations extends through the previous six years. That means your business could be penalized for lapses in coverage at any time during those six years.
Your business is at serious financial risk if an employee injury occurs while you’re uninsured. The injured worker can file a claim against you and the Alaska Division of Workers’ Compensation Benefits Guaranty Fund.
If the employer fails to pay, this fund covers the injury-related costs and then aggressively pursues full reimbursement from the responsible employer.
Rates for workers’ comp vary based on a number of factors. When determining the premiums for workers’ compensation insurance, insurers consider the following:
NEXT specializes in small business insurance and can help make sure you get the right coverage to satisfy Alaska workers’ compensation laws.
It only takes about 10 minutes to answer a few questions, review coverage options, purchase insurance and get your certificate of insurance.
If you need help at any point along the way, our team of U.S-based, licensed insurance advisors is ready to assist you.
In addition to workers’ compensation, Alaska businesses generally need a few other types of insurance in their insurance package, including:
General liability insurance offers protection for common accidents and mistakes on the job, like property damage or customer injuries.
If you or an employee makes a mistake at work or a customer makes a claim against you, professional liability insurance provides the financial protection you need to defend yourself.
Commercial auto insurance provides coverage if you or your employees are involved in an accident in a business-owned vehicle. It can also provide coverage for accidents in your personal vehicle while being used for work-related purposes.