Is it a sensible choice for you to shop around for workers’ compensation insurance? This decision depends solely on your specific situation. For most employers, it’s a good thing to do every couple of years. Although it may be a necessity, there are ways to lower the cost of your worker’s comp insurance premiums.
Understanding Workers’ Comp Insurance
Workers’ compensation protects both employers and employees while on the job. Each state has its own rules and regulations that employers must follow to ensure proper coverage.
Employees filing claims can only do so if their injury or illness is caused by their duties while on the job. Some examples include injuries that have stemmed from a slip or fall, a strain from heavy lifting, or an accident while operating equipment.
Who Needs Workers’ Comp Insurance?
Almost every business in the United States that has employees has to provide workers’ compensation. Most states require employers to purchase an insurance policy to handle their legal responsibilities to workers who are injured or made ill due to workplace experience.
However, as stated earlier, individual states do offer exemption from workers’ compensation insurance. Hence, it is advised that you are aware of your state laws.
Types of Workers’ Comp Insurance
Subjected to state laws, there are four types of Workers’ compensation insurance:
- Medical treatments
- Permanent Partial Disability Benefits
- Vocational Rehabilitation Benefits
- Death and funeral services
State-funded workers’ compensation programs offer coverage for employers using government subsidy. If you decide to purchase workers’ comp through a state insurance fund, there are two ways this type of workers’ comp insurance can be provided to a state’s employers and their employees:
- A monopolistic state fund is a government-owned and functioned fund that is set up to provide insurance coverage in identified states and territories. Employers must purchase coverage from the state fund, and private parties may not compete for the same.
- A competitive state fund is a state-owned and operated fund that provides workers compensation insurance to employers who operate in that state. Some states operate a worker’s compensation insurance fund in straight competition with private insurance carriers.
Insurance Shopping Guide
Once you decide that it’s time for you to start shopping, there are many things that you need to keep in mind. Here are five tips to help you keep your workers’ compensation cost in check:
#1. Know your state requirements
Workers’ compensation requirements vary from state to state. Each state mandates the workers’ compensation coverage, if any, that an employer must purchase and what benefits are available to injured workers. Your state will dictate where you can shop for a policy and which employees must be covered.
#2. Understand your available workers’ comp benefits
You should understand the benefits through the workers’ comp system. As insurance companies are “for-profit” businesses, you shouldn’t rely on the adjuster to fully explain your state’s benefits system or all of the benefits. Contact your state workers’ compensation agency or a workers’ comp lawyer for help if you have questions.
#3. Estimate and monitor payroll
When buying workers’ compensation coverage, estimate the annual payroll based on your current environment. At the end of the year, your audit will include checking the actual payroll, and your insurance carrier will issue a bill as needed.
#4. Ask about discounts and credits
You cannot control most of what is used to calculate premiums. But you can control costs by asking about deductions and credits. Ask about additional premium discounts in your state. Some states offer discounts to recognized groups. Your business must have a better than average safety history to qualify for a group.
#5. Review your policy regularly
Insurance policies should be reviewed annually. It is important to review your audit and policy carefully, even if you are not switching your carrier. Depending on the changes, you may save money on your policy. Be sure to discuss all changes to your business operations with your insurance agent or insurer.
Keep the Important Things in Mind
Employers are responsible for any injuries, which is why most states require business owners to carry workers’ compensation coverage. Without proper coverage, business owners could be forced to pay out of pocket for an injured employee’s medical treatment, as well as potential fines, depending on the state.
Here are a few steps employers should take to minimize the chance of a workplace accident:
- Conduct regular safety training.
- Reinforce best practices for safety.
- Conduct training sessions for employees on how to use the equipment properly.
Providing a safe work environment can benefit both business owners and their employees.