Workers comp

Definition

State-required cover for employee injuries, priced per $100 of payroll.

Why It Matters

Nearly every state makes it mandatory from the first employee, and a lapse is not a fine but personal exposure plus, in some states, an order to stop working. The premium is a class code rate times payroll times a multiplier set by the claims the business has had. That multiplier can follow the business across a sale, so a seller's history can price your first year whether or not you keep their carrier. Get the loss runs in diligence and have your own policy bound for day one, beside the liability cover.

In numbers: A $600,000 payroll in a class rated $4.50 per $100 runs about $27,000 a year at a neutral modifier, and a 1.3 modifier inherited from the seller's claims lifts it to roughly $35,000.