Five Misclassified Workers Comp Codes

Top 5 Misclassified Workers Comp Codes

According to the National Council on Compensation Insurance (NCCI), there are five workers comp codes that get classified improperly more then any other class codes. Those codes include  retail, wholesale, hardware, automobile parts and accessories, and furniture and drivers.  The specific workers comp codes that are misclassified include:

  • Retail (8017):  frequently confused with; 8010, 8018, 8008, 8044, & 9083.
  • Wholesale (8018);  frequently confused with 8010, 8032, 8017, 8232, & 8046.
  • Hardware (8010); frequently confused with 8018, 8017, 8058, 8046, & 8011.
  • Furniture (8044) frequently confused with 8017, 8018, 8010, 9519, & 8235.
  • Automobile Parts frequently confused with (8046); 8380, 8018, 8010, 8391, & 3821.

In most cases, store operations are required to be classified based upon the main type of merchandise sold. (typical meaning 50% of gross receipts). This is similar to the bar and restaurant industry.  The difference between retail and wholesale is that retail sales are for merchandise that is intended to be consumed by the general public for personal consumption. Not to be resold or for B2B sales. Wholesale applies to the sale of merchandise to a business entity with the primary purpose to be resold to toher consumers or businesses.

Common Reasons for Misclassification of Workers Comp Codes

In the retail and wholesale industries, the common reasons for a business to be classified wrong is that the gross receipts for one particular product amount to more than 50 % of all sales. This can happen when a store is a retail establishment that sells multiple products, but if more than 50 % of sales are for say groceries, fruits, vegetables, and meats; this store should be classified as a grocery store at class code 8006. This is also common for retail stores that sell primarily clothing, waring apparel, or dry goods.  Hardware stores are primarily reclassified to workers comp codes 8111 (Plumber Supplies Dealer) or 8046 ( Automobile Parts and Accessories). Again this is only necessary when the gross sales are more than 50% of the total revenue of the business.  In the Auto Industry, the most common misclassification is to class code 8380 (Automobile Service and Repair Center). It is not uncommon for businesses in this industry to service cars and sell auto parts. The deciding factor is amount of retail sales compared to service center sales.  In most cases, the center makes significantly more from the service center and should be classified as such. This can get tricky when businesses sale higher dollar parts like tires or engine parts because of the high dollar value of these items.  Partnering with an accountant and an independent insurance agent can help you prevent misclassifying your business.

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Tennessee Workers Compensation Rates 2019

Great News Announced about Tennessee Workers Compensation Rates 2019

Tennessee Workers Compensation Rates 2019 are going to be dramatically better. This past week, Julie Mix McPeak, the commissioner of the Tennessee Department of Commerce and Insurance (TDCI) approved a 19 percent decrease in recommended pure premium rates.  This filing is a result of a recommendation by the National Council on Compensation Insurance (NCCI) for 2019.

Smokey Mountains, Tennessee Workers Compensation Rates 2019

Tennessee Workers Compensation Rates 2019

Tennessee Workers Compensation Rates 2019 have decrease for the sixth year in a row. The 19% decrease comes after a 12.6% decrease in 2018 and a 12.8% decrease 2017.  All of these decreases are in addition to the fact that Tennessee had workers comp rates that were the 30 least expensive rates in 2016 and 22 least expensive in 2014.  These rankings are according to the 2016 Oregon Workers’ Compensation Premium Rate Ranking Summary.  This is a study done by the state of Oregon every two years to determine what each state pays for workers compensation insurance. Tennessee should be even lower on this list when the list comes out in early 2019.

Cowboy Hats in Music City are used to celebrate lower Tennessee Workers Compensation Rates 2019

Why are the Decreases for Tennessee Workers Compensation Rates 2019 Happening?

Lower Tennessee Workers Compensation Rates 2019 are credit to several factors.  Reforms to the workers compensation system were enacted in 2013 that improved the entire system.  Since these changes have been enacted, lost cost reductions have decreased more than 48%. Significantly lower workplace injuries have contributed to the decrease in premiums.  This decrease in workplace injuries has contributed to lower lost-time claims by employees resulting in less costs to the insurance carriers within the system.  Additionally, according to NCCI both indemnity average cost per case and medical average cost per case have remained “relatively stable” in recent years after adjusting to a common wage level. This means the amount the insurance carriers have had to pay for medical costs to injured workers has decreased significantly.

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Workers Compensation Insurance Rates California

Workers Compensation Insurance Rates California

Business owners in the state of california are in for a pleasant surprising starting the first of January, 2019. This is because of new Workers Compensation Insurance Rates California. The rates will be down to an average of $1.63 per $100 in payroll.  This is down from $$3.04 per $100 in payroll when the state market peaked in 2015. Since 2015, the rate has dropped every six months for the past 5 years.  This will be an average savings of 23.5% compared to what businesses paid in 2018 for California Workers Comp Coverage. When implemented this premium rate will account for a 72% decrease from when rates peaked in 2015.

workers compensation insurance rates california

Now the pure premium rate is only a recommendation. In the state of California, the legislature has not given the commissioner full rate authority over workers’ compensation rates. Many insurance carriers still offer rates up to 20% higher than the recommended premium.  Not all businesses will be impacted similarly depending upon the industry the business operates in and the loss runs of each individual business.

What contributed to Workers Compensation Insurance Rates California

The decreases in costs in California’s workers’ compensation insurance market is based on insurers’ cost data through June 30th of this year. Many within the industry credit state bill 863 and 1160 and assembly bill 1244. These bills have contributed to favorable medical loss development because of an acceleration in claim settlement.  According to Dave Bellusci, chief actuary with the Workers’ Compensation Insurance Rating Bureau (WCRIB), ‘Fraud investigations, as well as relatively low inflation rates for medical and pharmaceutical costs, are part of the reason insurance rates are lowering’.

Also, the way California has reacted to the prescription drug epidemic has significantly decreased the amount the workers compensation system has paid out for prescription opioids. The amount paid out for opioids prescription drugs was $15,687 per 100 claims in 2013 and has dropped to $3,204 per 100 claims in 2018 according to the WCRIB. Many people within the insurance industry in California are crediting the CURES Program (Controlled Substance Utilization Review and Evaluation System) for helping control this cost.  Under this program the state has set much stricter regulations for health care providers who prescribe opioids.

Golden Gate Bridge

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North Carolina Workers Compensation Rates are Decreasing

The Small Business Community will receive a 17.2% decrease in North Carolina Workers Compensation Insurance Premium in 2019

The North Carolina Small Business Community received great news this week in the form of a 17.2 % decrease in Workers Compensation Insurance Premium.  According to most recent data North Carolina has the 23rd highest rate for premium in the United States. Considering North Carolina has the 10th largest GDP of all 50 states, North Carolina Workers Compensation was already at a fairly competitive rate compared to other states across the country. The rates for North Carolina Workers Compensation have decreased consistently for several years. In 2016 North Carolina Rating Bureau (NCRB) approved an 8.5% decrease and in 2017 NCRB approved a decrease of 12.5%.  The current 17.2% decrease is in addition to these significant decreases. All of this news adds up to an enormous amount of savings for businesses in the state of North Carolina.

North Carolina Workers Compensation Insurance

Th 17.2% average North Carolina Workers Compensation decrease is not across the board for all businesses or for all industries. Businesses that operate in higher risk industries will still pay considerably more than businesses that operate in an industry with low historical claims. Some industries may receive a larger decrease than the 17.2% recommendation. Many industries will see a decrease that is smaller than this recommended decrease. The most positive part of this news is that nearly all businesses will see a substantial decrease in the amount the business pays for Workers Compensation North Carolina.

There are many factors that go in to what a business pays for workers compensation insurance premium.  The industry a business operates in and the experience modification rating of each individual business has a large impact on what a business pays for premium.  Also, the strength of the assigned risk provider in the state a business operates in has a strong impact on what a business pays for workers compensation insurance. The governing body within state of North Carolina has their own rating bureau. In most cases this does not have a positive correlation to what businesses pay for premium. The North Carolina Rating Bureau is strong. One aspect that contributes to the strength of the rating bureau in North Carolina is that they do partner with the National Council on Compensation Insurance (NCCI) to gather policy data, detailed claim information, and experience rating.  Because the State of North Carolina handles the part of the workers compensation that they can control better than NCCI yet they let NCCI do what they do best, the result is a much better rate of premium for the Small Business Community.

In 2019, a 17.2% decrease in North Carolina Workers Compensation Insurance Premium will help small businesses all over the state prosper. This will be especially beneficial to the coastal communities who are recovering from Hurricane Florence.  No matter what is going on in your North Carolina Community if you own or operate a small business you will be paying less for workers compensation insurance in 2019. If you need help finding even better coverage or lower rates on premium, click here to start a quote with Workers Compensation Shop.com.  We have specialists waiting to take your call at 888-611-7467. They can help you get the best value for you small business.

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How to hire the right employee

Hire The Right Employee

To hire the right employee, a small business owner must go in to the hiring process with a clear definition of who they are looking for and a plan in place to find the best fit. Finding the best fit is the most important part of hiring successfully. In most scenarios, the right fit is dramatically different from the most qualified candidate. Here are five ways to find the best candidate for the position you need to hire and save money on the hiring process for your small business.

Handshake while a Small Business Owner attempts to hire the right employee.

Know What You’re Looking for Going in

Having a plan for who you are looking for and how you are going to attempt to find them is crucial to the hire the right employee. You cannot just sit back and hire from the resumes you get. There has to be some thought into how you are going to get people to apply who are from groups of people that have a high likelihood of contributing positively to your organization.

Phone Screen Everyone to Hire The Right Employee

It is important to screen everyone via phone prior to a formal interview. This can save an enormous amount of time on the front end by eliminating people who simply are not going to be a fit or are not interested in your organization. They may not be interested because of the distance they will have to travel or the rate of pay for the position. No matter what the reason for the candidate to not choose your organization, it is an easy way to root out candidates who do not fit with a short phone call as opposed to tying up an hour or more of a managers day to a formal interview.

Ask About The Candidate’s 5 Year Goals

It is important to ask about the future plans of your candidates because it will give you an idea of what they are thinking about for themselves and what they might do to make themselves better employees for your organization. Living in a technological age means that successful employees have to adopt the concept that they must be lifetime learners. Asking about a candidates five year plan will give you insight in to how those employees might learn. It might tell you about whether the employees will take it upon themselves to learn or if they expect you to train them on everything that might help them in their role.  The answer to this question may tell you the hiring manager if the candidate is a self starter or if they are simply coming to work to collect a pay check.  Many candidates will embellish their plans, but their response will give you an idea of who they are and how they plan to operate within your organization.

Take Your Time to Hire The Right Employee

Never rush into making a decision about who to hire. Leaving a job post up for a minimum of two weeks is a good idea (A longer time period is even better). You never know who may apply at the last moment. It is equally important to not call the candidates you have interviewed until the candidate you have chosen is on the job for a certain period of time. Many organizations use one week on the job. Some organizations think this is too long of a time period. two full days on the job is usually a good time period to let a person be on the job before you tell the other candidates you have hired someone else. It is important to wait for this time period to elapse because the candidate chosen may not like the job or the organization after their first day on the job.

Go With Your Gut to Hire The Right Employee

Take your time and do everything within your control to make the most informed decision when you are attempting to hire the right employee. In the technological age that we live in today, it is easy to rely on artificial intelligence to tell you who the best employee may or may not be. It is important to use as much data as can be to make your decision, but it is also important to use human interaction to help you make your decision. In many situations, hiring the right fit is more important to hire the most qualified candidate. Do not be afraid to trust your gut when you are trying to hire the right employee.

 

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Risky Business

6 Small Business Practices that Increase Liability Exposure

Risky Business

Taking on Unfamiliar Tasks

Sticking to the bread and butter of what your business does is always the best way to reduce risk as much as possible. In some instances, there is no way to not get out of your comfort zone and take on contracts outside of your employees comfort zone. This does not mean you should never take on a job that has new aspect you do not work with frequently. An example of this would be a landscaping company taking on tree work where some employees may have to work at height. Another example might be a construction company that is doing a remodel of an existing property when they primarily work on new home construction. Neither of these examples are out of the realm of possibility for your employees to take on, but each example brings on some risky business that you need to be aware of in order to eliminate all possible risk. When you do take on something out of your normal business operations, it is a good idea to call your insurance agent to make sure your business is insured properly.  In some instances, these new activities may be excluded from your current policy.

Ignoring Regulations

Ignoring or not knowing regulations is risky business.  It can get a small business in to a lot of hot water in more ways than one. It can cause an increase in the frequency and severity of insurance claims. This commonly results in a negative impact on the experience modification rating of the business, which impacts the rate of premium the business pays for all lines of commercial insurance. Ignoring regulations altogether is illegal and can result in fines or a complete stoppage of business. In some drastic instances it can result in the business license being pulled and the business have to close its doors. Knowing and following regulations is the responsibility of the business owner. Taking regulations seriously is important no matter what industry a business operates in.

Failing to Use Adequate Contracts

Contractual obligations are always the best way to interact with another business when doing work for them. It may be common practices in some areas and in some industries to work on a handshake deal, but without a legal document in place your business can be taking on an enormous amount of risk. Contracts can keep everyone within a business interaction on the same page and it can help resolve any disputes that come up.  If a business owner does not feel comfortable writing up a legal document than they should enlist the help of a legal professional. It is very tempting to skimp on legal fees, (especially for start-ups) but in the legal profession you get what you pay for. Skimp on legal fees on the front end can be risky business. It may create an enormous cost to your business later when a contract does not go the way you intended.

Business Interruption

According to the Federal Emergency Management Agency (FEMA), ’40 percent of small businesses never reopen their doors following a disaster’.  During the five year period from 2006-2010, the average commercial flood claim amounted to just over $85,000.  If your business does not have the financial where with-all to withstand a financial loss than you need to secure adequate commercial insurance for small business. Not securing adequate coverage is risky business for any small business. Most insurance carriers carry specific packages for each industry called a Business Owner’s Package. Included in these packages should be Business Interruption Insurance. This type of insurance will compensate your business for lost income if you are forced to vacate the premises due to disaster-related damage that is covered under your property insurance policy. THe coverage may include the revenue you would have earned, based on your financial records, had the disaster not occurred. Having this policy or not can mean the difference between your business experiencing a bump in the road and the end of your business.

Employment Practices

Hiring and firing without knowing the rules and regulation within your state is a dangerous way to run a business.  Employment Practices Liability Insurance (EPLI) Lawsuits have been on the rise for the better part of a decade. Most successful business owners understand their employees are the heart and soul that drives a company forward. Partnering with both a lawyer and a human resource professional is the best way to develop a process for how your business will hire, train, employ, and fire employees. There should be a plan in place for how to deal with your employees from the pre-employment process all the way through the day the employee leaves the organization.

Not Carrying Insurance

Not carrying enough insurance is a problem in and of itself, as is carrying the wrong insurance.  In most cases not carrying insurance at all is illegal and puts your business in an enormously risky position. Regardless of whether you are a start-up or an existing business, it is risky business to go without some form of small business insurance. In most states and in most industries, it is legally required to carry General Liability and Workers Compensation Insurance. This is just the bare minimum coverage most businesses need. Partnering with an independent insurance agent is the best way to get unbiased information about what policy you definitely do need and what policies you may be able to do without.

 

 

 

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Workers Compensation Vocabulary

Useful vocabulary for injured workers dealing with the Workers Compensation System

 

Alternative Work

In some instances, the treating physician may report that an injured worker will more than likely not be able to return to normal permanent work. When this occurs, the employer has the option to offer the injured worker alternative work. The new position must be offered for 12 months in length and must also be 85 percent of the wage previously earned. Some times this alternative position must be at a new location. The new locations must be within a reasonable commuting distance from where the injured worker lived at the time of the injury.

Average Weekly Wage (AWW)

The Average Weekly Wage (AWW) equals the average amount of money an employer paid an injured employee for the 13 weeks before an injured employee had to miss work because of an injury or illness. Income and death benefit payments are also based on an injured employees AWW.

Cumulative Trauma (CT) Injury

Cumulative Trauma occurs from an injury that develops based on repeated events or repeated exposures at work. Carpal Tunnel is a common example of this type of injury as is hearing loss due to repeated exposure to constant loud noise.

Claim Employer

The Claim employer is the employer for whom the injured employee was working for at the time the injury occurred. This is who the workers compensation claim should be filed through.

Date of Injury (DOI)

The date of injury seems like a fairly straight forward term, but it can be much more complex depending upon the type and severity of the injury. If the injury was caused by one event it is known as a specific injury.  In this case the date of the injury is the date of the specific incident. When an injury is caused by repeated exposures it is referred to as a cumulative injury and the date the worker knew or should have known about the injury was caused by work.

Impairment Rating

The Impairment Rating that is intended to show a percentage of the work-related injury or illness that impacts the body of an injured employee as a whole. This percentage is meant to measure how far away from a persons normal health status and functionality.

Maximum Benefit Amount

The Maximum Benefit Amount is the amount of weekly benefits an employee is allowed within the workers compensation system. The amount cannot be more than the state average weekly wage (SAWW).

Medical Provider Network (MPN):

The Medical Provider Network is an entity or a group of health care providers that are organized by an insurer or a self-insured employer. They are set up to administer managed care for injured employees within the workers compensation system..

Minimum Benefit Amount

The Minimum Benefit Amount is the lowest amount of benefits an employee can get from the workers compensation system. In most states this amount is 15 percent of the state average weekly wage.

Multiple Employment

Multiple Employment occurs when an injured employee has more than one employer at the time of the injury.

Non-Claim Employer

The Non-Claim Employer is the employer an injured worker worked for at thetime of an injury that cause the injured employee to enter the workers compensation system, but this employer is not the claim employer. This is because the injury occurred at the additional employer the injured employee works for. This employer is labeled the claim employer.

Non-Pecuniary Wages

Non-Pecuniary Wages are wages that are not paid in cash. These wages may include health insurance premiums, housing allowance, travel reimbursement, or clothing.

Pecuniary Wages

Pecuniary Wages are wages that are paid in money, such as salary, commissions, and bonuses. Pecuniary wages include the market value of room and board, laundry, fuel, and any other benefit that can be estimated in money.

Permanent Alternate Position

A permanent Alternate Position is an additional job within the same company that may be offered to an injured worker when the treating physician reports that the injured worker will never be able to return to the same position previously held at the time of the injury or illness.  Some people within the industry may refer to this as Alternative Work.

Permanent Disability (PD) Benefits

Permanent Disability Benefits are moneys paid when an injury or illness result in a permanent impairment that prevents the ability of an injured worker to compete in the open market place. The extent of the disability determines the amount an injured employee receives. Additional factors that determine the amount of benefit an injured employee receives include the date of the injury, the age when injured, and the occupation of the injured employee. Permanent Disability benefits are paid every two weeks until the benefit is completely paid or when the employee settles the case and receives a lump sum.

Primary Treating Physician (PTP)

The Primary Treating Physician is the doctor who is primarily responsible for managing the overall care of an injured worker. This is the physician who writes medical reports that impact the worker’s benefits.

Reasonable and Necessary Treatment

Reasonable and Necessary Treatment is the type of medical treatment an injured worker receives when they enter the workers compensation system after an injury or illness caused by their job.  The treatment is in line with the standard of care for a specific condition. This standard of care is determined by the governing body within each individual state with recommendation from experienced medical staff as well as insurance professionals.

State Average Weekly Wage

The State Average Weekly Wage is different for each state. In most states it is equal to 88% of the average weekly wage within the state.  It is best to check with the state governing body in the state the workers compensation claim is filed to make sure an injured worker is receiving the proper benefits.

Temporary Disability (TD)

Temproary disability is a benefit paid to an injured workers that is paid when the primary treating physician verifies that an injured employee is not able to work because of a work related injury or illness. These benefits are not paid for the first three days an employee misses work. The amount the injured employee is paid is equal to two thirds of the employees wages.  The benefits stop when the injured employee returns to work or the treating physician releases the employee for work.

Vocational Rehabilitation (VR) 

Vocational Rehabilitation is administered when the Primary Treating Physician for an injured worker determines that the injury is severe enough to limit work now, but has the possibility to get back to normal with treatment.  When this is recommended, the employer and injured worker jointly select a rehabilitation counselor who will determine whether vocational rehabilitation is feasible, and develop a suitable rehabilitation plan.

Work Restrictions

Work Restrictions are administered by a primary treating physician with clear and precise limits on the job tasks for an injured worker within the workers system. The limitations are designed to prevent further injury and to get the injured worker back to normal health as fast as possible.

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Workers Compensation Benefits for Employees

4 Workers Compensation Benefits for Employees get from the Workers Compensation System

Workers Compensation Benefits for Employees when they are injured on the job are determined by each individual state government. The industries in each state can be drastically different from state to state and region to region. For this reason, the responsibility of administering a system of workers compensation is left up to the state governments in the United States. Each state has their own way of administering the system and their own individual types of benefits that are required for policies bought by businesses operating within the particular state. Here are the 4 types of benefits most all states require the policies sold within their state to provide within their workers compensation system.

Workers Compensation Benefits for Employees Medical Benefits

Workers Compensation Coverage pays for necessary medical care to treat injuries or illness that occur because of an injury on the job. Most workers’ compensation insurance policies pay for 100 percent of all reasonable and necessary medical treatment for injuries that occur as a part of normal business operations.  Now there are frequently disagreements over what is “reasonable and necessary” treatment. This is especially true  when doctors and patients disagree on the extent of the injury. It can also become a problem when the doctor and patient disagree on the proper course of treatment.

In most states, Workers Compensation Benefits for Employees have medical benefits are unlimited and occur with no deductible. The payments are made to the facility where the injured employee is cured or given maximum relief. Bills for service go out directly to the insurance carrier where payment is made directly to the healthcare provider.  The only responsibility of the employee is to follow the doctor’s orders.

 

Replacement of lost income is one of the Workers Compensation Benefits for Employees Income Benefits

Income benefits replace some of the money an injured employee lost during a time in which they lose work because of an injury or illness. In most cases it replaces a portion of any wages lost because of work-related injury or illness. This is the case if the injured employee is not able to work at all or if they are not able to garner the same wages as was earned prior to the injury.

Lost wages benefits are subject to minimum and maximum weekly payments. These amounts are determined by the state governing body within the state that has jurisdiction over the injured employee. Typically this is the state department of insurance. In most states, these defined limits are dependent upon the severity of the injury sustained and the expected term of the resulting condition. Injury severity is most commonly classified as either partial or total. Depending upon this classification the injured employee is placed into either a temporary or permanent status. benefit amounts are based on a combination of all of these factors.

Typically the amount of benefits an injured employee is paid amounts to two thirds of their average weekly wages. This is if they are not able to resume their previous position or some other light duty work, even if it is at a lower wage. If the injured worker does return to work at a lower wage, workers comp will make to make up the difference between the two positions. In cases where an injured employee receives a permanent loss of function or the loss of a body part, workers compensation may pay additional compensation.

Workers Compensation Systems are governed by the state governments. Each situation is dependent upon the laws and regulations of each individual state. Checking with the state governing body is the best place to receive the most accurate information.

reimbursement for Death and Burial Expenses are some of the Workers Compensation Benefits for Employees.

Death Benefits

Death Benefits are an additional Workers Compensation Benefits for Employees who have been killed because of an accident that occurs on the job. This benefit will replace a portion of the lost income a family will face because of the deceased family member. In order to collect death benefits the family member must be an eligible dependent. To be an eligible dependent who can collect death benefits within the workers comp system the death must occur within a certain period of time following a work-related injury and a request for death benefits must be made within a specified period of time following the death of the family member. In many states, a surviving spouse can collect death benefits for the rest of their life in many instances. This lasts until the spouse remarries. If there are dependent children when the employee dies, the children get half the benefits and the additional half goes to the spouse.

Burial Benefits

One often forgotten Workers Compensation Benefits for Employees is that most workers compensation policies will pay for some of a deceased employee’s funeral expenses. In some states it is a requirement to include burial benefits in all workers comp policies. Now the requirement is only up to a certain amount. If the family decides for an expensive casket, the additional cost is the responsibility of the family, but the work comp policy will cover some of the expenses during this difficult time.

Agents at WorkersCompensationShop.com have in-depth knowledge of all the Workers Compensation Benefits for Employees injured on the job.

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10 Questions to ask your Agent When Buying Workers Comp Insurance

Do I really have to carry Coverage?

The answer to this question (like many things in life) is, ‘it depends’.  Depending upon the state you operate in, the way your business is structured, the number of employees who have, and a number of other factors; there may be exclusions to allow your business not to carry workers compensation insurance. If you are looking for Workers Compensation Utah, it may impact your business dramatically different than if you are looking for Workers Compensation Insurance NY. The differences in coverage may be equally different if you operate a business in the Home Health Care compared to a Landscaping Company. No matter what the specifics of your businesses situation, it is usually best for your business to carry coverage in some form or fashion.

Should I carry Coverage anyway?

In most cases, yes.  It is almost always in your businesses best interest to carry some form of workers compensation insurance. Even if your business is not legally required to carry coverage, if you have employees your business is liable for injuries that occur as a part of normal business operations.  Workers Compensation may seem expensive when purchasing coverage every year, but it is much less than paying for the medical expenses, lost wages, legal fees, and any damages awarded in a court of law. Workers Compensation Insurance can help cover some or all of these costs. An independent insurance agent can help you understand the risks your business faces when you are Buying Workers Comp Insurance.

Are you sure I am classified properly for Buying Workers Comp?

Many businesses do not have some or all of their employees classified properly. This can cause your business to pay more or less for workers compensation coverage. Some employees may be classified properly depending upon the activities they partake in on a daily basis. Office employees are not as risky as employees who use dangerous power tools at height. Because of all of these differences, it is important to work with your insurance agent to make sure your business is listed in the proper Workers Compensation Class Codes.

What if I use 1099 Independent Contractors?

Using 1099 Subcontracting is generally  a very grey area with most contractors. It does not have to be.  Your insurance agent should help you determine if you should use 1099 or W2 employees. They also can help you determine if your contractors are actually employees to the letter of the law. Many business owners think they are using contractors when in reality the workers are considered employees in a court of law. If they are considered employees your business is required to cover them under the workers’ compensation system. The best way to determine how your employees are classified in the eyes of the law is by checking with your state governing body and by partnering with an independent insurance agent when Buying Workers Comp Insurance.

Do you have any flexible payment options for businesses looking at Buying Workers Comp Insurance ?

Flexible payment options are one of the most exciting aspects of the past decade for small businesses looking to buy Pay as You Go Workers Compensation Insurance.  Pay as You Go is an alternative payment option that allows businesses to get coverage in place at a significantly less initial cost.  A traditional policy requires a lump sum payment at the front of the term to get coverage in place. This amount is typically between 25 and 33 percent of the total annual premium. For seasonal and cash strapped businesses, this may be a significant amount of cash to come up. Additionally, a Pay as You Go Workers Comp Policy can help you pay your monthly payments more accurately and avoid most mid term audits. Your insurance agent should be able to help you determine if Pay as You Go Workers Compensation Insurance is right for your Small Business.

What is the Reputation of the Insurance Carrier?

The reputation of the Insurance Carrier is important to the entire process of workers compensation and commercial insurance overall. It is not wise to only buy insurance on price. Insurance is like many things in both business and in life, you get what you pay for. If one carrier is offering you a price dramatically different than all other insurance carriers you will more than likely find out why it is lower when you have to file a claim. Partnering with an independent agent is the best way to get unbiased information about each individual carrier. They can tell you why one carrier is lower or higher in price than their competitors. They can also explain if one policy offers more coverage that you may not realize you need or whether there is an exclusion that can cause a headache when you have to file a claim. This is information that is precious when a business owner is looking in to Buying Workers Comp Insurance

Is there automatic coverage for work in other states?

Some businesses have employees who do their job in more than one state.  This is common in cities that border two states or for businesses that provide services for businesses in multiple states.  If you do work outside of your primary state, it is crucial to determine if your policy will extend to the other state. Most states allow injured employees to file a workers compensation claim in the state they were injured in. Other states require the injured employee to file in the state they reside. In most court rooms, judges will follow the Walsh Test to determine which state has jurisdiction when an employee is injured in an accident that involves multiple states. WALSH is an acronym that includes: Worked, Accident, Lived, Salaried, Hired.

I have a few claims the past few years. Is that going to impact what I pay in Premium?

Your track record is important to an insurance carrier. No carrier wants to stake their reputation on offering coverage to a business with a history of frequent or severe claims. The “experience modification rating” is the number one aspect carriers use to determine if they are going to offer coverage and also what they are going to charge for that coverage. The good thing is this rating is something the business has some control over. Implementing a safety program and an effective return to work program will allow the business to lower the frequency of claims and the time injured workers stay off the job. This can positively impact your claims history and correlate to a lower insurance premium. No matter what your past claims history is, it is always important to be honest with your agent when they ask you about past claims. There is a paper trail they will have to check before quoting coverage. If you as a business owner are not forth coming about your claims history, it can make for an uncomfortable conversation for all involved when the information gets to the insurance carrier.  In the worst case scenario, it can cause a claim to not be covered.

How can I prepare for an Audit when Buying Workers Comp Insurance ?

The workers compensation audit process can be stressful and frightening proposition,  especially for new business owners. Your independent insurance agent should be able to help you prepare for this process. An Audit will take place towards the end of the term. This will check to see what employees are doing what jobs and in what amounts. Depending upon the accuracy of the projections at the end of the term and whether or not you went with the Pay as You Go Option the audit may result in either a credit to your business. In some cases it results in your business owing additional premium. Preparing for this scenario in advance is the best way to be positioned for the unexpected.

How do I get started?

If you get adequate answers to most of these questions, you know you are with an agent you can trust and it is time for you to begin Buying Workers Comp Insurance. The best way to proceed at this point is to call 888-611-7467 or click here to begin a quote with Workers Compensation Shop.  When you are ready to start a quote, here is a list of items the agent will need before they can get you the most accurate quote.

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Items Needed for a Commercial Insurance Quote

Here are the eight most important items needed to get a Commercial Insurance Quote

Many times while talking to a prospect and gathering information an insurance agent gets the response “why do you need that, I just need a quote”.  This is typically in response to the agent asking for the Employer Identification Number, the classification code of the business, or the average payroll for the past three years.  Agents can usually give a business owner a ballpark estimate of your premium depending on the state and industry, but that estimate is not an accurate quote. Without certain key bits of information the insurance agent and the insurance underwriter at each carrier cannot give the business owner a formal insurance quote.  There are many valid reasons why a business owner may not want to give out lots of proprietary information to multiple insurance agents. This is where partnering with an independent agent can really benefit a small business. By partnering with an independent agent, you can give this sensitive information to just one agency and they can do the shopping for you.  Regardless of whether you partner with an independent agent or do the shopping yourself, there are certain bits of information that are necessary to shop for commercial insurance.  Here are eight pieces of information you need to gather before begging your insurance shopping journey.

Correct Name and Spelling of the Company

It is very important that you give the insurance agent the accurate name and spelling of the company you are representing. This is going to be on file with the state department of insurance. If anything is inaccurate about the information it can cause major headaches down the road with the state governing body and with the claims department within the insurance carrier.  The way in which the company is formed is also crucial for Officer & Partner Exclusion Regulations per state.

Accurate Phone Number and Address

Just like the name of the business, it is equally important to have an accurate address and phone number on file.  The accurate information includes both the business and the current agent.  Phone numbers and email addresses are extremely important for the agent working on your quote and the future insurance carrier. Most underwriters for most insurance carriers require agents requesting a quote to enter an email address upon quoting and binding an account.  This is typically for billing purposes. If your business has a PO Box instead of a physical address, that is acceptable. Although in some instances a physical address is needed for the application and auditing process.

Years in Business

The number of years in business is crucial for most insurance carriers. If you are a relatively new business owner (Less than five years in business) it is a good idea to also include the number of years you have worked in the industry. This will not be formally counted, but most underwriters will take it into consideration when determining premium. In some instances, a business has been in business for a number of years and is just now needing general liability or Workers Compensation Insurance for the first time. If this is the case, most underwriters are going to want to know why.  Frequently this is because of growth, hiring your first employee, or working as a contractor where it is required for the contract.  The insurance carrier will need to know all of this information in order to give you an accurate quote.

Federal or Employer Identification Number

This number is needed for a number of reasons. First and foremost, this number acts as the social security number of the business. It is the main way each individual agency, agent, and carrier identify your business and their relationship to it.  This is particularly important because of your businesses relationship with the National Council on Compensation Insurance (NCCI).  This is the main governing body that determines ncci class codes and the recommended premium rate.  This will show the classification code you have used in the past as well as any specific audits of your company. If the class code changes, the underwriter will want to have a description of the reason for the change in classification code.

Officer and Owner Information 

Depending upon the state or states your business operates and how the company was formed, the information of the owner and officers may be necessary to get an accurate insurance quote. This may seem invasive, but all of the information an agent is asking for is necessary.  Depending upon a lot of this information there may be exclusions, credits, or discounts you are available for. If you do not offer this information to your agent it can result in you paying more for premium.

Estimated Annual Wages

The estimated payroll is something a business owner should take seriously when applying for commercial insurance. It may be difficult to calculate or predict, but it is essential to managing your commercial insurance premium. These estimates should be broken down by employee classification type (office, field, sales, etc.). Workers Compensation Rates in particular are based primarily on payroll. The insurance carrier comes up with your rate by using your payroll times the rate of the class of business per 100 in payroll. For a startup or a seasonal business, this estimation can be difficult. If you partner with an independent agent, they should be able to help you get a rough estimation.  You can start by taking the money per hour you pay certain employees, determine how many hours per week they will work, and finally determine how many weeks out of the year will they be working for your business. This number will give you a real number that you can give the agent to quote with.

Detailed Description of Operations

An Insurance Agent needs to understand what your business does on a day-to-day basis. This will help them place your business in the proper classification code. Not properly classifying your business can cost your business immensely more in premium as well as create several headaches when you have to file a claim.  Construction is one industry where this is very important. Telling your insurance agent that you operate a construction company does not give the agent or carrier a lot to go on. They need to know what kind of construction you are taking on. Your insurance agent will need to know if you work primarily on commercial or residential properties.  Your insurance carrier will want to know if you work primarily on new construction or existing properties? Each of these differences in construction bring their own unique risks. Depending upon what exactly you and your employees are doing, you may be charged more or less because of the risks you are taking on. This is why it is extremely important for the owner or operator of the business to take an adequate amount of time to discuss the operations of the business. The more information an insurance agent has about your business and your priorities, the more likely they are to provide you with a group of insurance products you will be happy with.

Copy of your Claims History

The Loss Runs or Claims History of your business is crucial to get an accurate quote. No insurance carrier will give your business a quote without know the claims history of your business. You can get a copy of this document from your current carrier. You do not have to contact your current carrier if you do not feel comfortable doing so. When you are dissatisfied with your current agency (even if you are just checking around to make sure they are getting you the best deal) you can get this information from the carrier without talking to your agency.

In closing, I cannot tell you how important it is to always be honest when going through this process.  This goes for your agent and carrier. Most every question someone within the industry asks you has a paper trail. They will find out the answer to the question at some point during the process. To not be truthful throughout this process will cause stress to you and your business sooner than later. Additionally remember that insurance agents are there to help you.  At least they should be. Talk to them long and honestly about the ins and outs of your business and what you value in your relationship with an insurance agency. The more honest you are with your agent and the more information you give them, the more likely the agency is to find a set of insurance coverages that will satisfy your needs.

 

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