Top 5 Best Tips To Know About Getting Workers Compensation As A New Employer
If you’ve had to buy workers compensation insurance before, then you probably know that it’s not cheap. As an employer, the cost can be quite high and this is exactly why there are so many companies out there that always look for the best ways to cut costs when purchasing workers compensation insurance. Luckily, we’ve come up with a list of useful tips below that we think can help you with this.
In most states, as an employer you’re required to provide your employees with workers compensation coverage. The regulations and also the rules that dictate the way this type of coverage applies to your specific business are controlled by the state’s regulatory authority.
It’s also important that you find out whether the state you conduct business in requires that you provide workers compensation coverage or not. That’s because each state is governed by different rules when it comes to the requirement of providing coverage. For instance, if you live in Missouri, then you’ll only be required to provide coverage if your company/business has a minimum of five employees. On the other hand, if you’re in the contracting business, then you are required to provide coverage even if you have a single employee on payroll.
Calculating the policy
Make sure to learn more about the way your premiums are going to be calculated as well. Premiums are calculated as a rate per one hundred of payroll times any schedule credits or discounts that may apply. In general, when getting workers compensation coverage, the policy is going to run for 1 year.
Hire the right agent
If you want to make sure you’re going to get the best price for your workers compensation policy (WCP), then it’s best that you find an agent to help you with it. Someone working mainly with commercial insurance is a great fit, but do ask him if he has access to at least 2 insurance companies. After you’ve decided on the amount of coverage you need, the agent is going to speak to the appropriate insurance agency and help you with any payment plans required for the purpose of budgeting your month-to-month expenses.
Ensure your job descriptions are accurate
When shopping for workers compensation coverage, the insurer is going to classify your business based on the specific industry you are serving. It’s not uncommon for a business to fit more than one job classification. Speaking of which, there are more than seven hundred workers compensation classifications available and the one that will match your specific business type needs to apply to the majority of payroll. For the proper classification of your company’s operations, it’s best that you hire a very experienced agent to help you with this, since this step depends entirely on him.
Because of that, it’s a good idea that you request to see as many job class descriptions generated by the regulatory authority as possible, since you can then compare them to the ones you’ve developed. In some cases, you may not entirely agree to the classification your agent has opted for. When that happens, ask your agent to put his choice in writing. After all, your monthly premium is directly influenced by your business’ classification.
Payroll projection based on job class
It’s very important to be aware of the fact that the premium calculation takes into consideration the payroll times the rate per one hundred for the specific job classification your staff is assigned in. Since payroll determines the premium, it’s very important that the job categorization payrolls are very accurate. On top of that, the payroll projection is for a period of 1 year and it starts from the date when the policy is gained.
When purchasing a workers compensation policy, the estimated payroll is going to directly influence the amount of money you need to pay as deposit for the premium. Since the WCP can be audited, you won’t be able to know the exact amount of money you need to pay for it until an audit is completed. This means that after you purchase a policy, the payments you’re going to make towards it are not what you’ll need to pay for the final premium. Therefore, it’s essential that you project payroll as best as you can.
Keep an eye on the payroll
Monitoring your payroll is very important, if you discover that your payroll exceeds your initial projection, then you need to do some adjustments. You can take care of this by getting in touch with your agent.
Carefully review the WCP audit
A lot of companies out there lose thousands and sometimes even tens of thousands of dollars per year as a result of the errors and miscalculations made by insurers. Sadly, employers aren’t made aware of these mistakes. To avoid finding yourself in the same situation as many other companies out there, it’s best that you carefully review all premium calculations and audits. If you see payments that you do not recognize or find some hidden payments, then take action right away. After all, you’re paying money that you shouldn’t be paying in the first place.
If this is something you cannot do on your own, then don’t worry, since you can hire an independent professional workers compensation audit consulting company. You’ll be surprised to see just how happy they are to help you sort things out with the insurance company!
All in all, by keeping these useful tips in mind, you’ll certainly be very happy with the cost of buying your very first workers compensation policy. It is true that this type of coverage is mandated by the laws of the state you may operate in, but it’s also true that you need to learn more about it in order to keep your costs low and avoid losing money in the process. On top of that, remember that the policy’s price is not fixed and you’re only going to know it upon the completion of the audit process.