Unless you’re careful, overpaying for Workers’ Compensation insurance can be a harsh reality of business ownership. That’s why we’ve gathered 7 easy tips for keeping your Workers’ Comp premiums and claims as low as possible. If you’re an employer with the sinking feeling you’re paying too much, read on!
1. Classify Employees Properly.
The insurance industry assigns a four-digit code to every job duty, so using the correct class code for employees can make the difference between hundreds to thousands of dollars in savings for the business. This is another reason not to fear the audit — they can reveal if employees have been misclassified. You can always proactively check with your insurance carrier to reduce the risk of overpaying. Some of the most common class codes can be found here; however, the best way to be certain is to check your current Workers’ Comp policy or to reach out directly to your agent/carrier.
2. Watch Out for Uninsured Contractors.
Subcontractors can help you take your business to the next level. However, when they are injured on the job, someone likely will need to reimburse costs for their medical care and return-to-work needs. If your subcontractor is uninsured, those claims will be filed under your general contractor’s Workers’ Comp policy. Claims are likely to drive up your premiums. This happens most often with smaller subcontractors — think sole proprietors and partnerships. If you’d like to continue working with subcontractors, a simple solution would be for them to purchase a “ghost” Workers’ Comp policy on themselves. Just send them this link!
3. Prioritize Risk Management for a Lower “Experience Mod.”
One of the more technical aspects of Workers’ Comp is your “experience mod” factor, which is the “ratio of the costs [of] your company’s actual Workers’ Comp claims compared to the expected costs for companies of similar size in the same industry.” Trending above the industry average means your policy will likely cost more, while staying below it means you’ll probably pay less. Read our blog on managing risks and creating a safer workplace environment for ideas on how to do this.
4. Focus on Proper Injury Management and Avoidance Procedures.
Question: When is the worst time to patch your roof? Answer: When it’s raining. The same is true for workplace injuries — having a set of well-defined injury management and precaution procedures in place before an employee injury occurs is vital. Even better? Many insurance carriers provide a 24-hour nurse triage hotline, which may result in some cost savings. Check your policy, or contact your agent, for details.
5. Develop a Return-to-Work Program.
For employees who’ve sustained a severe injury on the job, rebuilding their lives — and returning to work — can be daunting. Help them work through it by creating and implementing a return-to work program, even if their duties are different or lighter than before the injury. Not only does a return-to-work program help them take important steps back to work, but research also shows that return-to-work programs may help simplify claims and can improve a company’s aforementioned experience mod.
6. Ask About Available Discounts.
If you are working with an agent for your business’s Workers’ Comp insurance coverage, make sure to ask about available discounts. Much of what we’ve discussed here, like employee safety guidelines, return-to-work programs and a good experience mod — as well as deductibles — can result in a discount on your coverage. If there are no discounts offered, find out why and ask what does qualify for a discount in the future.
Good Workers’ Comp rates and coverage can also come down to who you are working with; fun fact, business owners who work with Direct WorkComp can save up to 30% on their Workers’ Comp insurance.
We also make it easy to…
7. Compare and save.
One of the simplest ways to avoid overpaying on Workers’ Comp insurance is to compare quotes and coverage. This doesn’t mean retooling your entire insurance program — if your agent doesn’t offer a Workers’ Comp solution, point them our way. With specialized pricing on approximately 300 class codes, Direct WorkComp is your dedicated partner for finding the best Workers’ Comp coverage for you.
