Workers' compensation insurance is one of the most highly rated insurance policies on the market. Paying for the medical expenses and payroll of injured employees is no cheap task and the insurance company charges adequately for the risk.
Working with an independent insurance agent will save you tons of time and money when it comes to your workers' compensation policy. Having access to options is a good deal and knowing them is just plain smart.
What Is Workers' Compensation Insurance?
Workers' compensation insurance is a policy taken out by an employer or subcontractor to cover the medical expenses and payroll of an employee or subcontractor injured on the job.
The majority of states mandate that workers' compensation insurance is obtained in some form or fashion. Knowing what your state requires can be found out by your local independent insurance agent.
Getting Down to Brass Tacks
Getting down to the brass tacks of what a workers' compensation policy will cost you as a business owner is not so simple. Breaking down the way a workers' compensation premium is calculated is a bit easier.
How a workers' compensation premium is calculated:
How an insurance company calculates your workers' compensation premium is important to know. If you're aware of how it's calculated then you can figure out how to get the premium lower, ultimately saving your bottom line.
The insurance company looks at a variety of risk factors when determining your premiums, and outlining them below is the quickest way to be in the know.
1.) What industry your business is in: The industry is one piece the insurance company uses to figure out rates. The riskier your business, the higher the rate will be. For example, a logger's workers' compensation premium would be pretty astronomical, but if you're an office worker you will get some of the lowest rates on the market.
2.) Classification codes: These are assigned to each group of employees based on what their job duties are. The classification codes will calculate the risk factor associated with your employees' job duties and payroll paid to each employee.
3.) Experience modification rating: If your business has three or more years of workers' compensation coverage and has been paying at least $5,000 or more in annual premium, then this may apply to you. An experience modification rating is your company's scorecard and will tell a carrier claims frequency and safety practices established. If you're unsure whether you have one, get with your independent insurance agent.
4.) Safety: How safe your business operates is a big deal, not only to the insurance company but also to your employees. If you hold regular safety meetings, have a safety manager assigned, and keep buildings and equipment up to code, you will score major brownie points with the insurance company. They love it when you are a proactive business owner and reward you for it by giving you lower premiums.
5.) Audits: How well you perform on your annual workers' compensation audits shows how put together and safe your business operates. If you collect proper employee and subcontractor documentation, have waivers signed, and are proactive, you're likely to keep low rates. Showing that you take your business seriously will only work in your favor in workers' compensation insurance and in life.
Workers' Compensation Costs
As you can see, there are a number of different ways an insurance company ultimately determines your workers' compensation premium. Since there isn't a crystal ball to predict your future worker's compensation premiums, it's best to leave the rate finding up to the experts.
Your independent insurance agent may even have a ballpark figure to offer you if you are just itching to know. Keep in mind that the figure is subject to change drastically once your business risk factors are held under a microscope.
Most Common Costs of Workers' Compensation by Industry
Depending on what state you reside in, the average cost per employee per hour is $1,0294. Multiply that by 40 hours a week for 52 weeks and you get $2,141 annual cost per employee.
Depending on what state you reside in, the average cost per employee per hour is $0.4093. Multiply that by 40 hours a week for 52 weeks and you get $851 annual cost per employee.
Depending on what state you reside in, the average cost per employee per hour is $2.6655. Multiply that by 40 hours a week for 52 weeks and you get $5,544 annual cost per employee.
The Benefits of Working with an Independent Insurance Agent
An independent insurance agent is the hero of the workers' compensation realm. They are knowledgeable, trained, and licensed to find you the most competitive rates with exceptional coverage. When it comes to insurance, they don't believe in skimping. And as a bonus, they work for you.
Yes, an independent insurance agent is someone you can lean on through all the stages of your business. They know how to get you covered in the beginning and even introduce you to local professionals who can help get you started.
Making sure your company is fully covered during all that the business world has to throw at it. Your agent is your knight in shining armor and will lead your business to safety.