While renewing Workers’ Compensation policy, it’s important to secure the necessary amount of coverage for your current workforce size, the kind of work your employees do, and your industry. There are legal implications and cost-saving opportunities to consider while you’re at it.
Here are essential steps to take before renewing a Workers’ Compensation policy.
1. Review Your Payroll and Job Classifications
Any recent changes to your business entity, such as from an independent contractor to an LLC company, can place your employees in an entirely new job classification for Workers’ Compensation purposes. Pivoting to a new industry impacts your insurance classification in the same way and affects how much your company pays for worker injury protection. To ensure proper coverage it is important to double-check the following before renewing a policy:
- Workers’ Compensation policy declaration: Check the declaration page for your current employees’ job classifications (and their roles) and your payroll estimates for each type of work performed.
- Scrutinize job classifications: Take note of any changed classifications within the past year or any anticipated future changes.
- Check allocated payroll: Does the industry you are operating in distinguish workers into multiple job classifications, for example a manufacturing firm with factory workers and office staff? If so, ensure that you have correct payroll allocations for each of the diverse employee roles as those estimates will significantly impact your Worker’s Compensation policy costs.
2. Find Out if Owners or Officers Are Included in the Policy
Compliance with relevant state requirements is one of the most critical considerations while renewing Workers’ Comp policy. Does the law require coverage for all employees, or can you get an exemption for owners or corporate officers? Check your policy to be sure you’re not leaving anyone out of coverage contrary to state law. Remember that while excluding any member of your team from Workers’ Compensation can reduce costs, it also excludes them from coverage benefits.
3. Review Your Hiring Plans
Adding or losing employees affects both your payroll and Workers’ Compensation premiums. If you are hiring more people later in the year, you should include payroll estimates for their specific roles in your coverage cost estimates.
4. Consider Pay-as-You-Go
Pay-as-you-go allows you to use your actual, real-time payroll costs, instead of projected annual estimates, to determine how much you pay for Workers’ Compensation insurance. Many business owners prefer this payment option instead of paying upfront for greater control over coverage costs. Pay-as-you-go also minimizes your Workers’ Compensation audit exposure.
Look for Comprehensive Workers’ Compensation Insurance Solutions
Make sure to look at different Workers’ Comp offerings available. Some solutions include risk management services and easy claims handling, so price alone should not be your only consideration. Understanding the true costs of Workers’ Compensation claims and ways to reduce your exposure are important for protecting your bottom line.
Taking these steps before renewing your Workers’ Compensation policy helps you to secure cost-effective coverage that protects your employees and your business. At PMC Insurance Group, we help independent insurance agents with comprehensive, customized Workers’ Compensation solutions to deliver more for their business owner clients. For more information contact our experts today.