Ways to Save on Workers Compensation

Ways to Save on Workers Compensation

Ways to Save on Workers Compensation

Below are a few suggestions for saving money on your workers compensation policy. While this list is not all inclusive it doeshighlight some of the more commonly missed items. Each state has varying laws related to workers compensation so please be sure to discuss with your agent.

Experience Rating: When it comes to saving money on your workers compensation the most impacting thing is....don't have claims. While that may seem like common sense, a lot of business owners do not realize that the price you pay for workers compensation can be directly impacted by your prior claims history. If you traditionally pay $5,000 or more in premium then you will be assigned an experience modification factor by NCCI. This factor can significantly increase your workers compensation premium, sometimes more than doubling it for those employers with really bad claims history. However, for those employers with good prior claims history this factor can significantly decrease your workers compensation premium. Sometimes by as much as 35% or more! Here is one area that it pays to have a workers compensation specialist manage your policy. Carriers report their loss data to NCCI for them to calculate the experience modification but sometimes this information is reported incorrectly which could cost you a lot of money!

Drug-Free Workplace: Taking advantage of the drug-free workplace program credit will save you 5% - 7.5% (depending on state guidelines)on your workers compensation and it is relatively easy to set up. We can help for free.

Safety Program Credit: Every company should have a safety manual but did you know that if you do have one you will qualify for 2% (percentage subject to state guidelines)off of your workers compensation!

Officer Exemptions: Exempt officers from workers compensation and save. Most carriers require an included officer to be included in the highest rated classification and often that classification rate isexpensive.

Record Keeping: Pay overtime? If yes, make sure you keep track of how much you paid. 1/3 of that payroll is removed when calculating your workers compensation premium. However, if you don't track it you can't get credit for it. If you are in the construction industry keeping track of different types of jobs your employees are doing is especially important since construction is classified by the work performed instead of the nature of the business. For example, lets say you are a painting contractor and you win a bid on a project that will require you to install some drywall and instead of using a subcontractor you decide to do it yourself. As a painter your workers compensation rate is $7.91 per $100 of payroll but while you are installing the drywall your rate is only $6.77 per $100. You only get credit if you track it though...

Subcontractors: If you use subcontractors, make sure they are insured. If they do not carry coverage while working for you then you will be charged for thier workers compensation.Almost every state has a "proof of coverage" database available to the public. Double-checking with the state to make sure you didn'tget a fraudulent certificate of insuranceadds another layer of protection.

Classification: Making sure your classified correctly is extremely important to ensuring you are accurately charged for your workers compensation. For some, this is not very complex. A drywaller is coded to the drywall code, a painter is coded to the painter code Not all business have such an easily identified classification and this is when makings sure you are in the correct workers compensation classification becomes extermelly important.

Deductibles: Deductibles can be a great way to save on your workers compensation but it does involve an element of risk so this is only encouraged for those employers who have taken steps to reduce losses. However, if you are one of those employers you can benefit anywhere from 2.7% to 12.9% (based on FL deductibles, each state varies and some don't have deductibles as all)depending on what deductible you want and what "hazard grade" your business is in. The higher the hazard grade the lower the discount so this works great for low risk businesses since they will get more of a credit for the risk they take. Deductibles range from $500 to $2,500 for the more common ones. Some carriers have deductibles anywhere up to $1M.

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