Three Considerable Consequences of Workers Compensation Insurance

Construction Worker Injured After Fall - Workers Compensation Insurance

It’s only fair to warn you that workers compensation can seem pretty nebulous. Numbers are shifty, varying widely from one insurance company to the next. Failure to pay attention in the purchasing stage of workers compensation can cost way more than it has to. While there will always be a certain variation from one state to another, there is a fairly reliable way to avoid making three common mistakes.

Miscalculating the Costs of Workers Compensation

While there are some variables in the equation, a fairly standard process is used to determine what you will pay for workers compensation insurance. The first element taken under consideration is each company’s individual estimated payroll. This can prove rather problematic for companies just starting out or going through substantial changes in operations. Unfortunately, underestimating payroll will eventually result in penalties, which must be paid within 60 days to avoid a Stop Work Order. Understand that your payroll will be audited, regularly, by either the insurance provider or your state’s workers’ compensation fund oversight committees.

Never forget that this figure is the backbone of premiums that are set for your policy. Accuracy is incredibly important. If this seems like a potential problem for your enterprise, talk to your insurance provider about some of the pay-as-you-go options out there. These solutions are usually run either through a payroll service or through the insurance carriers themselves. This will always be accurate, right up to your latest pay period.

Wild Variations in Premium Prices

One frustrating reality of workers compensation is that there can be wild variation in price even if you know exactly what your payroll is and will be. This is because even though your job class code rate is set by the state, each insurance carrier has their own personal preferences as to which businesses they feel comfortable working with. The good news is that by doing your homework and finding out which workers compensation insurance provider specializes in your industry and sector, you can obtain premiums at lower prices.

The more time and effort you invest in this stage, the more money you’ll be able to save over the course of your coverage.


You’ve Been Deemed High Risk

Companies use certain modification factors to determine how to charge you for past mistakes and probable risk. Premium prices are obviously lower for those with safer backgrounds, fewer claims and a better health and safety record. For this reason, you have to take Risk Assessment seriously. It’s important, and it saves or costs you money, depending on how you determine and handle risk.

If you’ve been risky in the past, there’s no time like the present to start working on a clean slate.

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