Suggestions for Maintaining Workers' Comp Coverage

Undoubtedly, one of the major goals of any employer is to make a profit. Sometimes, it may become tempting to cut corners in order to make more money. One thing that should never be sacrificed is workers' compensation insurance coverage. Given the price that many employers must pay for workers' compensation premiums, is there any way that they can keep the costs down? You bet. Here are ten of them.

Check Your Policy for Accuracy

  1. If you are a very small employer, check the number of individuals on your payroll. Many states have an exception for employers who have fewer than a certain number of employees (usually 3 or 5). These very small employers are not required to carry workers' compensation insurance. If you have recently had an employee or two leave your employ, it is possible that you could now qualify for the exception.
  2. Review your payroll. Has overtime been included in your calculations for purposes of computing your premium? Some states allow workers' compensation premiums to be calculated on regular payroll figures, excluding overtime. If overtime has been included in your premium calculation, ask if it can be removed. The less payroll you have, the less your premium will be.
  3. Confirm that your experience rating is correct. Employers who pay more then $5,000 per year in workers' compensation premiums automatically receive an experience rating which compares their claims history to the claims histories of other firms within the same industry. The more claims you have, when compared to the industry as a whole, the more risky you are considered to insure and the higher your premiums go. Make sure that yours has been correctly calculated.
  4. Ensure that you are classified as the right type of employer or employment field. Employers who have heavy machinery or hazardous materials in their everyday workplace will likely have a higher premium than employers who have employees who work only with telephones and computers. Make sure that your premium is being calculated under the right classification for both the type of work you perform and the number of employees you have in "high-risk" positions.

Consider Some Changes

  1. If you are a participant in an assigned-risk pool, gather information on how much your premium would be if you were not a participant. Many times, the premiums that are charged in pools are higher than they would be if you were insured by yourself. If your premiums would be lower outside of the pool, consider taking steps to head off on your own. This may take some time to accomplish, particularly if you have been placed in the pool due to your claims history. You may have to show that your workplace is now a lot safer than it was at the time you got pushed into the pool.
  2. Do some research and consider whether self-insurance might be right for your business. Generally, in order to be self-insured you have to have a large workforce and be able to show that you are clearly solvent. Self-insurance is not a good solution for every employer, and it is not allowed in every jurisdiction, but it might be right for you.
  3. If you are not already, consider whether you want to pay a deductible toward worker's compensation coverage. A number of states allow employers to reduce their premiums through the payment of deductibles.
  4. Consider whether you want to use managed medical care, such as an HMO, to treat workers injured under your employer. The majority of states allow managed medical care providers to handle workers' compensation claims. While you may not win the hearts of your employees by switching to managed care, you will save money in insurance costs.

Help Your Employees Help You

  1. Return your injured workers to work as soon as possible. The longer injured employees sit at home or in therapy recuperating, the more money your insurance company is paying them. Of course, no employee can be forced to return to work before they are physically ready. However, they may be able to work in a different position, or a light-duty job, if they cannot return to their pre-injury employment.

Make Safety A Top Priority

  1. Get serious about safety. Initiate safety programs and protocols to try to, as much as possible, prevent workplace injuries. The fewer claims you have, the lower your premiums will be.

Next Steps

Contact a qualified business attorney to help you navigate business liability and insurance issues.

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