If there is one thing that all employers have in common, it is the desire to save money on their business insurance. While most employers have several business policies to contend with, it is typically their workers’ compensation premium that eats at the bottom line.
Depending on your industry, workers’ compensation insurance premiums can be a significant operating expense in addition to the indirect and opportunity costs associated with employee accidents and illnesses. Temporary replacements can lead to lower productivity, accident investigations can be expensive, and OSHA fines and penalties may be involved depending on the incident. Employers need to be aware that there are steps they can take to reduce the cost of workers’ compensation insurance and the indirect costs that come with it.
5 Ways to Save Money on Your Workers' Compensation Insurance:
Safety Program - Although most employers have to deal with workplace accidents at some point, implementing a comprehensive workplace safety program can significantly reduce workplace accidents and injuries. In fact, it has been proven time after time that the return on investment from having a safety program far exceeds the expense of implementation and monitoring. If you have never implemented a safety program, most insurance carriers offer proven resources to help your business reduce accidents and illnesses. The most important part of having the program is enforcing the rules for safety and holding employees accountable when they are careless in the workplace or at the job site.
Elect a Small per Claim Deductible - Anytime you elect an insurance deductible, your business is agreeing to pay a portion of the expenses associated with an injured employee. If your business has the available financial resources, you should consider a deductible or increase your current deductible which will always result in a lower premium charged by your carrier.
Review Your Employee Classifications - Very often your insurance broker may not be familiar with every employee's job description and duties. Make sure that your employees are properly classified by reviewing your policy prior to renewal. It is possible that employees who have multiple responsibilities may be misclassified resulting in your business paying a higher premium than required based on the correct payroll. For example, a small contracting business may have an employee who spends half the week working at the job site and the other half soliciting business in the field. If your broker is unaware, it is very possible that you are paying too much for the employee's coverage.
Exclude Company Officers - In many states, the workers’ compensation board will allow an organization to exclude officers of the company. Small contracting businesses usually have company officers that can be excluded from coverage. It is important, however, to verify that the excluded company officers have individual health insurance that will pay for injuries if they are hurt on the job.
Self-Insure - Many states allow qualified businesses to partially self-insure for their workers’ compensation benefits. Although small businesses will typically not qualify, you can search for an association to join that offers a workers’ compensation fund you can join. In most cases, the members of the funds will save money because the loss experience is based on the entire group rather than an individual business.
Depending on your industry, workers’ compensation insurance premiums can have a very negative impact to your business’ profitability if the proper steps are not taken to reduce your risk and the eventual claims that will result from workplace accidents. By using a combination of any of the steps listed above, your business will likely reduce its workers’ compensation insurance premium expense.
To get more information about workers’ compensation from an experienced and reputable company, visit Patriot Underwriters and speak with an insurance professional who will be happy to help you identify areas that may reduce your premiums and provide a safer workplace for your employees.