Workers' Compensation Insurance
The grand bargain
Workers' compensation is a no-fault statutory system: benefits are paid regardless of who caused the injury, and in exchange the employee gives up the right to sue the employer for negligence. That exclusive remedy is the core concept. Missouri requires employers with five or more employees to carry workers' compensation coverage; the Division of Workers' Compensation administers the system, and the Second Injury Fund addresses preexisting disabilities.
Covered benefits
Medical care (unlimited, with no deductible or copay), disability income (temporary total, temporary partial, permanent partial, permanent total), death benefits for dependents, and rehabilitation. Indemnity benefits are a statutory percentage of the average weekly wage, subject to state maximums.
The policy: three parts
Part One is workers' compensation itself, with no dollar limit - the insurer pays whatever benefits the statute requires. Part Two, employer's liability, covers suits outside the comp system (third-party-over actions and spouses' claims) and is written with limits such as $100,000/$500,000/$100,000. Part Three lists other states where coverage applies; an injury in an unlisted state falls under Part Three only if endorsed.
Premium mechanics
Premium equals payroll divided by 100 times the classification rate, adjusted by an experience modification factor. A debit mod above 1.00 reflects worse-than-average losses; a credit mod reduces premium. Because payroll is estimated, premiums are subject to audit.
Traps
Officers, sole proprietors, partners, and LLC members are often excluded or must elect coverage. Independent contractors may still be treated as employees for comp purposes. The CGL employer's liability exclusion pushes those claims to the WC policy. Part One has no limit; Part Two does.
Worked example
Payroll of $500,000 at a $4.00 class rate per $100 yields $20,000 manual premium; an experience mod of 0.85 produces $17,000 before schedule credits.