How Do I Lower My Workers Comp Premiums?

In the past few decades, workplace safety has become an issue, and one that all are aware of. As a result, overall workers compensation claims have gone down drastically in the past few decades.

That said, we must point out that there are some industries where they have gone down less than others

If you want to lower your workers compensation premiums, there are several paths you could go down.

First, initiate a risk management plan in your business. Start out using your insurance carrier’s risk management staff. They are the people who understand the industry from that side. Implementing safety procedures lower your risk factors for the carrier, and this step could save much money.

As you grow it is likely that you can delegate your own staff to take over the tasks involved with that risk management plan. You might even get to a point where you can hire someone specifically for that task.

Has your company had claims? If so, are those claims in a particular department? Find out why and address them as part of your risk management program. Then advise your carrier that you are working in that direction.

Find out how your payroll is reported. Is overtime factored into it? Are bonuses? This could be a driver of your premiums.

Additionally, you might look into starting a program to assist workers to get back into the workplace more quickly, which mitigates the losses your carrier is paying, and losses are what drive premiums.

Normally, a program where your workers can come back gradually and in a limited capacity which will increase step-by-step works best.

Check your job classification codes and insure that they are classified correctly. Sometimes the wrong classification can change your rates.

Keep your carrier informed of all changes and improvements made to the workplace.

Remember to review your workers compensation annually along with all of your other business insurance. Work closely with your licensed insurance professional and your carrier to make sure your risk exposure, coverage, and premium is where they need to be.

Part-Time Business Insurance

Statistics show that approximately 10% of households operate a home-based business; businesses such as desktop publishing, car repair, consulting, or tailoring.

And so we hear this question from time to time: Does my part time business need insurance?

It is not an uncommon assumption that such businesses are covered by the homeowners insurance. This is actually not the case. And the assumption often puts part-time business owners at risk for serious financial damage in cases which involve accidents, clients who believe they have been damaged due to one service or another of the business, errors and omissions, or damage to a computer, website, or loss due to bad weather.

Indeed most homeowners insurance policies will not cover business-related losses. Frequently, a business rider can be added to the homeowners policy, and in some cases, simple businesses will need nothing more than that.

But if you are doing repair work or any sort of manufacturing, you are likely to need more commercial coverage than a rider. A general liability insurance policy, and/or business property insurance.

Additionally, if you have even one employee, you will need workers comp insurance.

And going without is perilous to your pocketbook as well as your home, property, or more!

Protect your home, your business, and your security by talking to your licensed insurance professional in order to determine just what coverages you need.

Business Owner’s Insurance: Keeping It Simple

I am a firm believer in living life by the principle of K.I.S.S.

For the uninitiated, the acronym means “Keep It Simple, Silly.” Well, actually, the second “S” can be any of a lot of things, but we’re keeping this polite.

The idea is, the simpler you make solutions, the less complications you will be met with if those solutions go south.

That being the case, let’s look at business insurance in its simplest forms.

General Liability Insurance:
General liability insurance protects you against damages, injuries, or other risks of liabilities which may be imposed by lawsuits which are sustained at your place of business by a third party.

Workers Compensation Insurance:
Workers Comp insurance is the form of insurance which provides medical benefits and wage replacement to your employees who are injured on the job. Some states also require that businesses provide additional coverage as well. Your licensed insurance professional can help you to determine what coverage is mandatory and what is prudent for you.

Buildings and Property Insurance:
Building insurance is also called commercial building insurance or property and casualty insurance. This coverage which protects financial risks due to damage to or loss of a physical structure that the insured owns or leases. There are some losses which are not automatically covered by this type of insurance. Flood damage, for example, is usually not covered automatically. So if you lived in a flood zone, you would want to work with your licensed insurance professional in order to ensure that your potential flood losses are insured.
Commercial Vehicle Insurance
A commercial auto insurance policy covers business vehicles and their drivers. If your circumstances dictate it, your auto coverage can be combined with property and casualty insurance in your business owner’s policy. It is important to note that it is a fact that many business owners assume a variety of risks by using their cars and assuming a personal auto policy will cover any risk.
There are numerous kinds of additional insurance which are available to business.  Again, it is a fine idea to have a thorough and frank discussion with your licensed business insurance professional in order to make the best decisions about the options which are available for your business.

How Can I Reduce Worker’s Compensation Premiums?

claims continue to decline.  Understand of course, certain industries still continue to have up ticks in claims and costs.  These may vary year to year and industry or even industry segments.

Implementing a risk management plan in your business if you have to pay workers compensation insurance premiums is a great starting point..  In the beginning, utilize the risk management staff at your carrier, the company that writes the workers compensation to help you set up your plan.

As you grow and get larger, it may make sense to assign this to staff and eventually, even hire someone to perform this function.  Implement safety procedures which make you a better risk for the carrier.  Keep a log and track days without incidents.  In addition, take a look at the following to see if it may help you reduce your premiums:

  • Start a program to allow workers to get back into the work place faster.  Establish a step program which would allow for limited capacity which would gradually increase. Remember that rising rates are a result of benefits paid.  The earlier an employee can get back to work, the better for everyone.
  • Check on how your payroll is reported.  Overtime and bonuses may not have to be factored in to payroll costs which help determine your premium.
  • Has your company had claims, is it a particular department or group? Investigate and address these as part of your risk management program and make sure to advise your carrier.
  • Check your job classification codes, sometimes they may be classified wrong and raise rates.
  • Keep your carrier informed of changes and improvements made to the workplace.
  • Schedule annual reviews with your carrier and invite them in to see improvements.
  • Challenge your carrier if you feel it necessary.  Use industry associations and your state department of insurance as a resource.

Don’t be afraid to review your workers compensation annually with all your other business insurance.  Work with your commercial insurance broker and the carrier to make sure your coverage, risk exposure, and premium is where they need to be.

Workers Compensation and the ADA

Social Security Disability Insurance, essentially the first American worker’s compensation plan, was loosely based on the Prussian system, a system which inspired the gloomy author Franz Kafka, who worked within the bureaucracy of the Prussian workers compensation system.

Modern-day workers compensation insurance has at its core the concept of no-fault insurance. The system is set set industrial accidents are going to happen no matter how careful employees are. This system was set up in order to deal with those events.

In the United States, workers comp claims are handled by state compensation boards which are created and overseen legislatively. Each state handles worker’s compensation claims differently, but all of them assign monetary amounts for various body parts and/or injuries.

American workers compensation insurance remained static up until the 1990s.  The impetus for drastic change was the Americans with Disabilities Act, which became law in 1990.

The Americans with Disabilities Act mandated that employers make “reasonable accommodation” for employees with disabilities. Due to the ADA, then, employees who suffered back injuries which would previously have gotten them a permanent disability, were now able to continue working due to the fact that their employers were now mandated by law to make accommodations to make their continued work possible.

Because the ADA no longer recognized many disabilities as permanent and complete disabilities, the long-accepted payment schedules no longer made sense.

In one of the most famous workers compensation cases, an employee at the Santa Fe railroad won more than a quarter million dollars as a settlement for permanent total disability under workers comp. His doctor had testified he would never be able to work again to to a back injury he acquired on the job. Less than a week and a half after the settlement, he filed a lawsuit under ADA because he said he was wrongfully terminated due to his disability which was covered under the Americans with Disabilities Act.

The lawsuit was thrown out, of course, but this serves to illuminate the reader as to the massive changes that then had to be done.

Insurance for Employers

Insurance for employers, what you need to know in designing your plan.

Owning a business and hiring employees can be extremely rewarding. It also can be extremely time consuming and sometimes even financially challenging. Having people depend on you and the business to make a living comes with a great deal of responsibility.

Let’s first look at required insurance that needs to be provided for employees. Almost every state requires that you have workers compensation insurance in place when you hire employees. The actual requirement varies state to state, but it is recommended to put it in place with even one employee.

Workers compensation in the simplest definition protects the employee in the event of a work related injury or illness. Medical costs, rehabilitation costs, and income replacement as well as a death benefit are provided. In return, the business is protected from a lawsuit from such an injury or illness.

It is best to talk with your state department of insurance and a licensed insurance professional to determine specific coverage and requirements for you business. Several states also require some form of disability insurance for employees. Again, discuss this with your insurance professional.

Employee benefits include types of insurance which include health insurance, dental, disability, life, and possibly others. While not required, employee benefits help attract and retain good employees to help grow the business. Business owners also benefit as they are part of the benefit plan and there are also tax advantages to offering employee benefits.

Most small business will design a very basic employee benefit package to start. This package will usually include medical insurance and perhaps dental insurance. A shared cost with the employee is quite common. Supplemental insurances may be offered as part of the package and may be 100% employee funded.

As you grow your business and the number of employees, you can redesign your benefits package. With a higher number of employees come generally greater options and programs. Work on plan design from the onset with your licensed insurance professional.

History of Workers Comp Insurance

History of Workers Comp Insurance

When I first started looking into the history of workers compensation insurance, or workers comp, I had no idea I was going to end up going back so far into history.

I will not bore you with all the details, but suffice it to say that the first documented case of workers comp insurance for bodily injury dates back to about 2050 B.C. That’s about 300 years before the Code of Hammurabi.  The case is found in the ancient nation of Samaria in the of Ur, which codified, on a stone tablet no less, the “Law of Ur,” which spoke of monetary compensation for injuries to workers’ body parts. These injuries included broken bones.

Other cultures which had forms of workers comp insurance include Greek, Arab, Romain, and Chinese laws, each of which provided its compensation schedules with exact amounts for loss of various body parts.

During the Middle Ages and the Renaissance — the fifth to the 17th centuries — English common law was being developed to include what would later morph into modern-day workers comp insurance.

You may remember that the industrial revolution took place in the 18th and early 19th century, and it changed the way the world worked. Quite obviously, the Industrial Revolution ushered in a need for such an insurance. English Common Law struggled mightily to establish laws which would protect the new influx of the new class of workers.

Fast forward to 1911, in the state of Wisconsin. This was where the first modern-day comprehensive workers comp law was passed. Later that year nine other states followed suit, and 36 more before the end of the decade. The very last state to pass workers compensation laws was Mississippi which did so in 1948.

This legislation required regulated doctors’ fees, which led to a strong resistance in the medical community. There were allegations of attempts to socialize medicine and fears that physicians would no longer be able to learn a decent living.

Social Security Disability Insurance which rolled onto the scene in the 1930s, expanded disability to include illnesses that were non-work related. Obviously, with this expansion, more physician involvement was going to be necessary. That, as it turned out, proved to be quite popular within the medical industry.