As a small business owner, you care about your employees’ success, as well as their wellbeing and their safety in the workplace. With that said, even the most conscientious employers have to face the fact that mishaps can and will occur even in the safest of workplaces. Accidents are inevitable in any workplace. So, it’s crucial that you have sufficient workers’ compensation coverage that will protect both your business and your employees. As important as workers’ compensation coverage is, it can feel like a burdensome expense. And yes, it can be expensive. Luckily there are ways to save money on your premiums so, you can have peace of mind while sticking to your small business’s budget.
Calculating Workers’ Compensation Premiums
The amount you’ll pay for worker’s compensation insurance is calculated using a simple formula. The premiums for workers’ compensation insurance are calculated per $100 of your company’s payroll. That means that your rate will go up as you hire more people.
In addition, the nature of your business, and the type of employees you have, will play a major role in establishing your premium. When purchasing workers’ comp, you’ll have to give each employee a class code, based on the risks of their job. Each state provides the class codes for different types of employees. For example, a warehouse supervisor and an administrative worker will have different codes. So, there will be a big difference between the rate at a factory and the rate at a beauty supply store. In order to ensure that your business is charged a fair and reasonable rate, it is crucial that your employees are classified correctly.
Your final price will be adjusted based on a number of factors, including “modifiers.” The modifier will be based on your claim’s history. Your insurance company will go over your claims history and assign you a modifier. The typical modifier rating is between .75 and 1.25. Modifiers of 1.0 or less are possible if your business has a documented history of successfully lowering workers’ exposure to injury risk. If there have been numerous incidents at your workplace, your modifier will be higher than 1.0. If you can get your modifier for workers’ compensation insurance down to 1.0 or lower, your premiums will go down.
9 Ways to Cut Workers’ Compensation Costs
The following are some simple things that you can do right now to cut down on your workers’ compensation costs:
Choose the Right Workers’ Compensation Policy
It is essential to do some comparison shopping in order to find the best workers’ compensation insurance policies. In the same way it is when choosing the best auto or health insurance policy for yourself. If you live in a state that has a competitive market, which the vast majority of states do, it is in your best interest to speak with multiple insurance companies about the premiums they are willing to offer you and your business.
Once you have a policy in place, you should continue to shop around at least once every few years, since insurance companies will periodically change their prices in an effort to woo customers away from their competitors. Unfortunately, if you live in a state that does not have a competitive market, you won’t have the option to shop around. But there are still other steps you can take to lower your premiums.
Follow Claims Management Best Practices
Perhaps the single most important thing you can do to keep your workers’ comp costs under control is to make sure you’re handling claims with best practices for claims management. “Best practices” include simple tasks like keeping in touch with the employee and possibly medical personnel. This can mean staying on top of any possible issues that may pop up, such as coverage not kicking in on time or money not coming through.
If you need help, an adjuster can make the process go smoothly and save you money by doing things like making sure all paperwork is filed on time, verifying coverage, and keeping a daily diary of all work completed on the claim. This may cut the payout amount by as much as half.
Create Strong Safety Protocols
Creating a safe workplace environment can do wonders for employee morale. As well as help save money on workers’ compensation claims. It’s less difficult than you might think to establish a culture of safety. In fact, you’re probably already doing some of this work already.
First, make sure your staff has access to the tools and information they need to stay safe on the job.
If you don’t do so already, schedule periodic safety inspections.
Use daily safety checks to constantly remind workers to be cautious whenever they are at work.
Plan weekly and/or monthly in-depth inspections.
Putting an emphasis on safety will not only reduce accidents and injuries among workers and help lower your workers’ compensation premiums but will also demonstrate your concern for their well-being.
Know What to Do in Case of Injury
Having a strategy ready in the event of a workplace injury is an important part of fostering a culture of safety. Managers, co-workers, and the claims adjuster would all have immediate tasks to perform in this scenario. For this to go smoothly, each person involved needs to know what they are responsible for.
Having a plan in place gives workers the opportunity to make choices that lessen the severity of injuries on the job. In the event of an accident, they will feel more at ease knowing that everyone around them is prepared to help.
Offer New Hire Incentives
Incentive programs are a great way to motivate employees, especially new hires, to follow the safety procedures in place. You can offer more experienced workers incentives to teach newer workers about your business’s safety culture.
Utilize Return-To-Work Programs
Workers’ compensation costs tend to be lower for businesses that utilize return-to-work programs. These programs encourage injured workers to return to some sort of duties as soon as possible. Doing so will help with the indirect costs of an employee’s injury such as:
Overtime pay for workers who do the injured person’s duties,
Compensation to cover a decrease in productivity,
The cost of hiring and training new workers.
The time that managers or supervisors have to take away from their administrative duties to help out.
With all that said, the sooner an injured worker returns to work and starts making money again, the less you will have to pay. So consider implementing some sort of return-to-work program.
Look for Workers’ Compensation Discounts
Find out if your state offers workers’ compensation discounts to businesses that implement safety programs. For instance, some states reward businesses that promote drug-free workplaces with tax breaks. Since workers who use drugs while on the job are more likely to get injured. So, showing that you promote a drug-free environment by doing things like requiring regular drug testing for employees can get you a tax break for being proactive.
As noted above, not only will different companies have varying overall workers’ compensation rates. But the costs associated with various categories of workers will also vary. A sheet metal worker, for instance, will have a different classification code than a bookkeeper. Who spends little time in the factory. This means that it’s extremely important to verify that each worker has been assigned the appropriate classification. You can save a lot of money by following this one piece of advice.
Check for Workers’ Compensation Safety Rewards
It is possible that the number of accidents that take place at work will decrease after you begin putting some of these ideas into action. Check with your insurance company to see if they will reduce your premiums in recognition of the fact that your business has been safer for the past year. These kinds of safety rewards are typically distributed after a period of one year during which there were fewer claims filed. These rewards are not guaranteed. So, it is important to check with your insurer to determine whether or not safety rewards are currently being offered.
Get Workers’ Compensation With EZ
Most businesses are required by law to carry workers’ compensation insurance. Doing so will not only protect your business but will also protect your employees. Keeping your employees safe, though, does not have to be a financial burden on your business. There are a lot of different ways to encourage safety routines and programs, all of which will help you cut down on the amount of money you have to spend on workers’ compensation. Your employees will be able to return to work as soon as they are medically cleared to do so if the best practices for claims management are implemented and adhered to in a timely manner. Not only will production return to normal, but also the costs associated with workers’ compensation will decrease.
If you’re looking for the best workers’ comp policy, come to EZ for free instant quotes from one of our licensed agents. And, if you already have workers comp benefits but would like to shop around, we can help you look for a better deal. Your EZ agent will be well-versed in the regulations in your area. They will be able to advise you as you shop around for the best policy at the most affordable price. To get started, simply enter your zip code in the box above. Or give us a call at (855) 694-0047 to speak with one of our licensed agents. Also be sure to check out our blog for more resources focused on helping business owner save money and stay protected.
