How Does Workers’ Comp Work in Alabama?

An A-Z guide on everything you need to know before you purchase an Alabama Workers' Comp Insurance Policy

Alabama businesses must carry workers’ compensation insurance if they employ five or more people. Unlike some other states, this requirement extends to corporate officers, LLC members, and part-time employees. Some independent contractors in high-risk industries must also carry workers’ comp insurance, such as construction contractors.

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Required with

5 employee

Any business in a very high risk industry, even without employees, must have coverage.

Who is exempt?

Municipal employees in areas with fewer than 2,000 residents
Domestic workers
Casual/day laborers
Farm workers

Is workers’ compensation insurance required in Alabama?

Alabama does require that most businesses operating within its borders carry workers’ compensation insurance. Under Alabama law, any business with five or more employees must provide workers’ compensation insurance.

However, the state defines an “employee” more broadly than other states do. Part-time workers are included, as are LLC members and corporate officers.

Are self-employed professionals in Alabama required to carry workers’ compensation insurance?

Yes and no. Some self-employed professionals/independent contractors must carry workers’ compensation insurance because of the high risks within their industry. For instance, construction contractors must carry workers’ compensation insurance even if they are the only employee of their business.

Who is exempt from Alabama workers’ comp requirements?

Only very small businesses with less than 5 employees are exempt from Alabama’s workers’ comp laws. Note that everyone employed within a business is counted as an “employee” even a corporate officer.

How much is workers’ comp coverage in Alabama?

Your Alabama workers’ comp rate will depend on the following factors:

The type of business you have
The size of your payroll
Your safety record
Claim history

How can Alabama small business owners save money on workers' comp?

Looking to purchase workers’ comp insurance but worried about how much a policy will cost? You can use several tactics to limit how much you’ll pay for a policy, including the following:

Classify your employees correctly (employee classification is a major driver of costs)
Create a workplace safety program and ensure employees receive safety training
Start a drug and alcohol-free workplace initiative
Train your employees to follow OSHA safety protocols
Be sure to apply any dividends after your annual workers’ comp policy audit

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How does workers’ comp work in Alabama?

Not sure how the workers’ comp process works in Alabama? It’s pretty straightforward.

First, you’ll need to get quotes from insurance companies based on your annual payroll. Once you choose an company, you’ll pay your premium. That gives your business coverage for a year.

Once the term is over, you’ll go through an audit to determine if you overpaid, in which case you’ll be refunded the difference, or underpaid, in which case you’ll receive a bill.

What does workers’ comp cover in Alabama?

Workers who file a workers' comp claim in Alabama can receive benefits for the following:

Medical bills

Lost Wages

Death Benefits

Workers' comp coverage also protects employers from legal action. This means that if an employee sues your business because of a workplace injury, the insurance will cover the legal costs of the case.

How do I buy workers’ comp insurance in Alabama?

Like most states, Alabama offers three paths to obtaining the workers’ compensation insurance you need to protect your business and employees.

You can get a policy quote from a insurance agent, like Kickstand Insurance. You can get a quote in just seconds with our online form.
If you can’t get insurance from an insurance company, you can buy from the state fund, which is administered by the National Council on Compensation Insurance.
You can self-insure if your business is large enough. You’ll need to prove your business has a net worth of at least $5 million, a current asset/liability ratio of 1 or higher, and a positive net income for each of the previous three years.

What are the penalties for not carrying workers’ comp insurance in Alabama?

If your business is required to carry workers’ comp insurance but you fail to purchase a policy, the state can enact a range of penalties.

You may be fined $1,000 per employee per day.
You may face criminal charges and jail time.
You may be ordered to stop work until you’ve obtained workers’ comp insurance.

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FAQS

What are the death benefits provided by workers’ comp insurance in AL?

All workers’ comp policies in Alabama are required to provide death benefits if an employee dies in a workplace accident or due to a work-related illness. Those benefits are payable to the employee’s spouse and qualifying dependents.

Death benefits can receive weekly payments of up to 75% of the employee’s average weekly earnings. Payments can be made for up to 500 weeks.

Eligible dependents/spouses may choose to receive a lump sum payment instead of weekly payments.

How do workers’ comp settlements work in Alabama?

In some cases, an employee may choose to settle their worker’s comp claim rather than pursue it in court. Usually, this involves accepting a lump sum payment. The employee, employer, and insurance company must agree to the terms of the settlement. However, a settlement does not necessarily mean that the employee waives their rights regarding the claim. The state allows the case to be reopened if the employee experiences further health challenges within four years of the settlement.

What are the statutes of limitation on workers’ comp claims in Alabama?

Employees have two years to file a workers’ compensation claim from the time of injury or the last disability payment.

How do I get a workers’ comp insurance policy with Kickstand Insurance?

Start by filling out a short online form about your business. We’ll use that info to get you an estimated quote. Then, one of our experienced agents will contact you to review the quote and make sure you are getting the absolutely lowest rate possible for your business. Once the quote is finalized, you’re ready to buy the policy - often with coverage starting that day!

Ready: Fill out an online form. It only takes 5 minutes!
Set: One of our agents will contact you to review the quote.
Go: You can get covered starting today!

Why use Kickstand to
get workers' comp insurance?

Speed + Service + Experts

Document with workers’ compensation insurance quote surrounded by insurance icons

Unlike other online insta-quote systems,
here your quote is reviewed by experts

Why does it matter?

Avoid surprise bills at audit
Make sure all your employees are properly covered
Protect yourself from lawsuits

What do we check?

Business categorized correctly
Employees job roles
Special discount opportunities

Ready to get started with Kickstand?

It’s time to get the coverage you need. Just complete our simple online form and we’ll get you a no-obligation quote and connect with one of our expert AL agents. It’s that simple!

Start your instant Alabama quote now!