It's an easy risk to overlook. You have medical insurance to cover the cost of your health care, but you may not have noticed if your policy excludes illnesses and injuries that arise in the workplace. Many policies do exclude them, which means that you will be personally responsible for all of the costs of treating an illness or an injury that results from work.

But then, what can go wrong? You're not in a dangerous occupation, like construction, and you've never had a serious accident in your home.

Think again. You could trip on the carpet in your office and break an arm or leg. Your nanny could injure her back lifting your child or could fall down your stairs. If you work in health care or dentistry, one accident with a needle and you could contract a serious disease.

To cover such injuries and illnesses, you need industrial insurance coverage―also referred to as worker's compensation insurance―provided by the Washington State Department of Labor & Industries (L&I). 

While most workers are covered by industrial insurance, which is paid for by their employers, certain individuals are not automatically covered.

  If you're a business owner, you're not covered by Washington State's industrial insurance program―the Washington State Fund―unless you specifically apply for and obtain optional (elective) insurance coverage from L&I. For L&I purposes, business owners include sole proprietors, partners, members/managers of limited liability companies, and certain corporate officers/shareholders of public and private companies.

  If you employ domestic help, industrial insurance is mandatory when you employ two or more persons regularly for 40 or more hours per week. Anything less and the insurance is optional. Unless you obtain elective coverage for your domestic help, you could be personally liable for their medical costs if they have an accident while working for you. 

What is Industrial Insurance?
Industrial insurance provides "no-fault insurance benefits" to workers in Washington who "are injured in the course of their employment or develop an occupational disease as a result of their required work activities."

Industrial insurance covers an "injured worker's approved medical, hospital and related services that are essential to his/her treatment and recovery" in the event of a work-related injury or occupational disease. Industrial insurance also provides partial wage replacement payments to injured workers who are temporarily unable to work.

Employers must provide industrial insurance coverage from L&I for all their employees, with limited exceptions. In return, employers normally cannot be sued for damages due to an employee's workplace injury or illness. L&I manages all of the workplace injury claims and pays the resulting benefits from the Washington State Fund's insurance pool.

How Do I Apply for Elective Industrial Insurance?
If you are a business owner, check to see if your medical policy covers workplace injuries. If you're the employer of domestic help, check your homeowner's policy. If you're not covered, you can apply for elective industrial insurance from L&I.

The application forms are available online, as follows:

  For business owners:  Application for Elective Coverage - Sole Proprietor, Partners, For-Profit Corporate Officers, or Member/Managers of Limited Liability Company (LLC) is available at http://www.lni.wa.gov/FormPub/Detail.asp?DocID=1561.

  For employers of domestic help and other excluded workers: Application for Elective Coverage of Excluded Employments is available at http://www.lni.wa.gov/FormPub/Detail.asp?DocID=1562..

Where Can I Find More Information?
L&I has created a fairly comprehensive Employer's Guide to Industrial Insurance, which you can download from the web at http://www.lni.wa.gov/IPUB/101-002-000.pdf.

If you have additional questions or want help in applying for elective industrial insurance coverage, you can call your advisor at Bader Martin.

David Stiefel is a Bader Martin shareholder and director of the firm's family and closely held business practice. He has also earned the AICPA's Personal Financial Specialist (PFS) credential, awarded to CPAs with proven expertise and experience in financial planning.  David's work integrates accounting, tax, and business consulting services for private and family-owned companies and their owners. His clients operate in a range of industries, with an emphasis in hospitality, distribution, professional services, retail, and real estate. David also has significant professional experience in the areas of forensic accounting, litigation support, and expert testimony.

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