Report these changes to ensure that you are not hit with unexpected workers comp rate increases.
At the end of your workers compensation insurance policy term, your insurance provider will conduct a final premium audit. During this audit, your insurer will review the policy’s named insureds, payroll information, job classifications, and so on. At the conclusion of your audit, your insurer may actually charge you more than the previously agreed upon final premium amount to account for unreported business changes. The best way to avoid this surprise cost is by reporting these major business changes to your insurer as they occur.
Unreported payroll changes are the top reason for employers being charged additional premiums at the time of their final audit. Usually, this happens when a business hires new staff members and neglects to tell their insurer about this payroll increase. This is problematic because workers comp premiums are based largely on a business’s payroll and the class codes assigned to each staff member. With every employee that is added to or lost, a business’s workers compensation costs will fluctuate accordingly. To ensure that you are not forced to pay additional costs at the end of your audit, make sure that you report all staff changes as they occur during the policy period.
When a business changes what it specializes in, this could impact the workers compensation class codes that are applied to their employees. As previously mentioned, it’s important that these class codes are accurate and updated as they directly affect a business’s workers compensation insurance premiums. Again, informing your insurance provider about your business’s operational changes will ensure that you do not run into significant workers comp cost fluctuations down the line.
A change in your business’s ownership may have implications beyond a workers compensation premium increase. This is why it’s important that you report all material ownership changes to your insurer before the shift actually occurs. This will allow your insurer to review the facts and ensure that your business has the right coverage moving forward. In many cases, new owners cannot inherit a previous owner’s workers compensation policy. At this time, they need to secure a policy of their own.
This is how constant reporting can help you avoid surprise premium increases with your workers compensation insurance. Do you have further questions regarding your business’s workers comp coverage? If so, then contact the experts at PMC Insurance Group. Our highly-trained professionals are eager to assist you with all your commercial coverage needs today.