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3 Ways to Save on Workers’ Compensation Insurance
Admin • October 13, 2017
In most states, businesses that have employees are required by law to carry workers’ compensation insurance. There's often no way to eliminate this expense, but there are a number of ways businesses may save on their workers’ compensation premiums. If you run a business, here's how your business might save on its workers’ compensation coverage.
Shop Around for a Policy with an Independent Insurance Agent
First, you'll find the best rates on workers’ compensation coverage by comparing policies with an independent insurance agent.
Only independent agents are able to show you policies from all the insurers in your state. Agents who are with a particular insurer can only get quotes for policies from that insurance company, which prevents you from comparing all of the policies that are available. With an independent agent, you'll know how your policy compares to the others that are available.
Many people are aware that independent insurance agents can help them compare personal insurance policies (e.g. auto and homeowners policies) from different insurers. Business owners, however, sometimes don't realize that independent agents offer the same benefit with regards to workers’ compensation insurance.
Set Up a Return-to-Work Program
A return-to-work program is a system that's put in place to help injured employees return to work as quickly as possible. A program might include any of the following strategies to help injured employees get back to work sooner rather than later:
- Letting an employee come back part-time until they fully recover
- Letting an employee work from home as much as possible until they recover
- Adjusting an employee's duties to compensate for their injury
- Giving an employee additional sick leave to provide time for medical appointments related to their injury
- Altering an employee's workspace to make their workflow easier
- By getting injured employees back to work as quickly as possible, your business will minimize how much income employees lose. This directly benefits an insurance company that provides workers’ compensation insurance because one of the protections that this insurance offers is compensation for wages that are lost due to on-the-job injuries.
Not all insurance companies offer discounts for reducing their risk in this way, but some companies do. It's worth checking whether your business' workers’ compensation provider offers a discount for implementing a work-from-home program, though. Setting up a program is fairly easy.
Get Itemized Invoices from Subcontractors
In general, workers’ compensation insurance provides coverage for employees who are injured while working. In some situations, however, coverage is also extended to subcontractors who are hired by your company. When workers’ compensation coverage is extended to subcontractors, the amount they're paid for labor is factored into a policy's premiums.
In theory, only a subcontractor's labor fees should be figured into a workers’ compensation policy. These fees are equivalent to a subcontractor's wages, and they may be covered by a policy as a result. Payments for materials, in contrast, aren't lost wages. As a result, they aren't normally covered under workers’ compensation or included in premium calculations.
If you can't show your business' insurer exactly what you paid a subcontractor for labor, however, the insurer may have to assume that everything you paid was for labor. They won't have a way to determine what were labor charges and what were material charges. Therefore, they may have to include all charges in their coverage—and their premium calculations.
To make sure your business doesn't end up paying for workers’ compensation coverage of materials charges, request an itemized invoice from every subcontractor your business hires. Itemized invoices will break out the different charges, and your insurer will be able to more accurately calculate premiums. Your business will benefit by not overpaying for coverage.
For help finding a workers’ compensation insurance policy
for your business, contact us at S.N. Anthony Insurance Inc.
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