While worker’s comp insurance is beneficial to you and your employees, the costs can add up. Is there anything you can do to save money? Keep reading to learn more.
You Can’t Opt Out of Workers Compensation
You can’t opt-out of workers’ compensation to try to reduce your insurance costs. Wisconsin requires you to have it if you have three or more employees. Other states have similar rules, and if you have employees that work in another state, you need to follow the rules for the state they’re working in.
The one exception is certain large companies can self-insure by demonstrating that they can meet certain financial requirements to guarantee they’d be able to cover any claims. This generally only applies to large corporations rather than local businesses.
You Do Get a Benefit Out of Workers Compensation
Workers’ compensation is not a sunk cost. It can cover all types of workplace injuries ranging from an infected paper cut to a fatal construction accident. Workers’ compensation covers things like lost wages, medical bills, and rehabilitation. Most employers would offer at least some of these benefits on their own, and there’s also a chance you could be sued for an accident if workers’ compensation wasn’t covering it. Therefore, you should also think about how much money workers’ compensation is saving you.
Your Rates Depend on Your Industry
The first step in calculating your worker’s compensation rates is determining what industry you’re in. Industries that have a higher risk of accidents pay higher rates. While this seems like a simple task, you may need to do some research if you offer multiple products or services or if your business has changed over time. If you’ve switched from in-house manufacturing to pure retail but never updated your industry, you could be paying too much.
Your Rates Also Depend on Individual Jobs
If you run a construction company, you don’t pay the same rate for every worker. A laborer has a higher chance of injury than your office receptionist and will cost more to insure. As with your industry, you need to make sure you have each worker classified correctly and update their classification if you move them into a new position.
Your Claims History Can Increase or Decrease Your Rates
With the industry and job classifications, you can look up in a table how much you should pay for each worker. However, there’s one more step. The rate in the table gets multiplied by your experience modification rate. The mod is 1.0 if you have an average number of claims, more than 1.0 if you have an above-average number of claims, and less than 1.0 if you have a below-average number of claims.
If you work to improve workplace safety, you can reduce your number of claims and pay less for workers’ compensation over time.
Your Insurance Agent Can Help You
While there’s no rate shopping with workers’ compensation insurance, your insurance agent can still help you classify everything correctly and find ways to improve safety. To get help, talk to Butler Insurance.