I sell many insurance products. But I believe the most confusing of all is workers compensation. Here are 5 pieces of information that may help.
1. Workers compensation is workers compensation. The basic product sold is the same from company to company. The difference is found in how claims are handled, price, discounts that are available and the most important difference is the agent that services your workers compensation policy. The questions you should ask an agent is how much experience do they have working with workers compensation? Will the be able to help you with audits, do they understand first report of injury reports, can they explain what a MOD factor is? Do they charge you for certificates of insurance. The Thomas Fierst insurance agency shines in all these areas and we do not charge for a certificate of insurance.
2. Cost is determined by payroll. New to workers compensation? Watch out for your quote. Since workers compensation is determined by payroll you won’t know the true cost of your workers compensation until the end of the term. If you start with a payroll of 50,000.00 a year and you hire more people and your actual payroll for the 12 month term of the policy is 100,000.00 then you owe premium for the difference, or for the additional 50,000.00 of payroll. Now, if you actually had less payroll than what you started with, then you will be owed a refund. It actually does work both ways. which leads us to our next point.
3. An annual audit will be conducted: And the annual audit is determines the true cost of your workers compensation. As we said, if you stated that your payroll was 50,000 and you end up having a prosperous year and you higher more workers and your payroll for the twelve month term is 100,000, then you owe the difference, however, if you only had 25,000 of payroll, then a refund is owed you for the difference of 25,000 in payroll you over paid. Nice, isn’t it? Oh, your carrier will want proof and they will want it in the form of copies of your 941 quarterly tax return.
4. You must fill out a First report of injury, it’s the law! When an employee gets hurt, don’t mess around, file the first report of injury. By so doing, you protect your employee and you protect yourself. I know that clients have concerns that if they file a claim their insurance will go up, but there is a built in cushion, a loss is expected. However, if you are concerned about premium increases, then the best practice is “safety”. Ensure that you are doing everything you can to keep your work environment safe. Your employees will appreciate that you care.
5. As an owner you can exclude yourself from your workers compensation policy. You must own at least 25% of your company to exclude yourself, but be aware, if you are hurt, you will have no coverage. I always suggest that if someone is going to exclude themselves from a policy, they should at least have some disability insurance in place. Be aware of what you are signing and understand if you will not have coverage and the ramifications of that decision.
And my final thought is this, accidents do happen. But, there is much we can do to prevent accidents. Always be vigilant.