8 Practical Tips for Buying Work Comp Insurance
Workers’ comp entails a lot, especially if you have many employees on your payroll. As such, it is easy to make costly mistakes if you don’t understand the process well. For instance, underestimating your payroll and misclassifying your employees can affect your workers’ comp insurance costs in the long run. Therefore, follow these eight workers’ comp buying tips to get the right coverage for your employees.
Understand Your State’s Requirements
Workers’ comp requirements vary by state. For instance, this coverage is mandatory in all states except Texas. Additionally, states like Ohio, Wyoming, Washington, and North Dakota do not permit employers to purchase workers’ comp from private insurance providers. Also, workers’ comp is only mandatory in Georgia if you have at least three employees. As such, find out what your state requirements are to avoid non-compliance.
Classify Your Employees Based on Their Roles
Workers’ comp premiums increase with risk. That’s why construction workers will likely pay more for workers’ comp coverage compared to accountants. As such, the insurance company will require you to classify your employees based on their roles in the business. For each class, the insurer will assign a code, which will, in turn, determine the insurance rates.
Estimate and Monitor Payroll
When signing up for workers’ compensation insurance, you need to estimate your annual payroll, considering possible payroll fluctuations. During the end-year audit, the insurance company will either increase or reduce your premiums if you underestimated or overestimated your payroll respectively. Therefore, once you’ve estimated your annual payroll, keep monitoring it for proper planning.
Keep Your Existing Policy Within Your Reach
If you already have another workers’ compensation policy in place, keep it within reach. This is because your insurance provider will likely want to review it before renewing it. Your existing policy will provide information such as the class codes on your payroll, claim history, and loss runs, which will help calculate premiums.
Find Effective Ways to Lower Costs
The average workers’ compensation insurance cost in the U.S. is $1 per $100 of payroll. Even so, employers with high-risk workers can pay high premiums for workers’ comp. For instance, workers’ comp costs about $33.57 per $100 of payroll for high-risk workers in California. To lower your workers’ comp premiums, you can ask for discounts if you have workplace safety and formal training programs. You can also lower these costs by choosing a favorable payment plan or reporting your payroll monthly.
Carefully Review Your Audit and Policy Annually
The Insurance Information Institute (III) recommends reviewing your business insurance coverage annually. Therefore, during the annual workers’ comp audit, be sure to make changes to your policy where needed if you will stick to your insurance provider.
Choose the Right Class Codes for Your Workers
There are currently over 700 class codes in the U.S., each assigned to a specific job type. Ensure you choose the correct codes for your employees, mainly because this will greatly determine how much you pay for workers’ comp.
Consult an Expert
Purchasing workers’ compensation insurance can be hectic due to the many things involved. For instance, it may be difficult for you to classify your workers correctly unless you are an expert. To simplify this process, ensure you consult a workers’ comp expert for guidance.
How Remland Insurance Can Help
Work with a reputable insurance agent to ensure you get the right workers’ comp coverage for your needs. Talk with our insurance experts at Remland Insurance to ensure all your insurance needs are covered. To get started, contact us today!