5 Things to Know When Insurance Shopping

Insurance Shopping is a wise thing for a business owner to do if not every year, at least every few years. It is not wise to switch carriers frequently based on a slight drop in premium, but it is wise to look around in an attempt to make sure your carrier is competitive with the marketplace. Here are five things to keep in mind when looking in to insurance shopping.

Digital Graphics implementing how a business goes about insurance shopping.

Understand the Value of an Independent Agent

An independent insurance agent is valuable to a small business owner because they are not attached to any one insurance carrier. The fact that they are independent allows the agent to give business leaders advice about each policy and each carrier. They can show you which policy offers the lowest premium and they can give you additional information about each carrier. Margins within the insurance industry are very small. When one insurance carrier is offering a similar policy for a significantly lower premium, there is usually a reason for the premium being lower and that reason is rarely because it offers more coverage or the carrier provides better service of that policy. An independent insurance agent can tell you what to expect when partnering with each individual insurance carrier.

Bundle Policies

Bundling policies is a good idea for a small business for a number of reasons. First and foremost, bundling all coverages with one insurance carrier in a BOP prevents there being gaps in coverage. A gap in coverage occurs when two policies that deal with a claim have exclusions pertaining to the particular claim. Bundling policies with one carrier allows the agent to make sure these gaps do not exist and your business is properly covered.

Do Not Prioritize Price

Price should be one of a number of factors to consider when deciding which policy and which carrier to go with. Margins in the insurance industry are very tight. When a business owner bases their decision primarily on price, they are taking the risk of purchasing an inferior coverage. When a claim occurs, the business should be prepared for less coverage when they decide to go with a significantly cheaper policy.

Analyze your limits

As your facility and equipment age, it is wise to speak with your agent about what exactly is the value of those pieces of equipment. If a piece of equipment is crucial to or business being able to operate, replacing that equipment quickly is important to the ongoing operation of the business. If this is not the case, it might be better to lower the limits of a policy. This is especially important when it comes to old vehicles or old equipment. If the business owns a vehicle that has a value that is similar to what the deductible might be, it might be better for the business to just deal without the vehicle or purchase a new vehicle. No matter what the situation is for your business, it is worthwhile to discuss lowering your limits with your insurance agent from time to time.

Consider an Umbrella Policy

An Umbrella Insurance Policy is designed to sit on top of all existing insurance policies when the limits of those policies have been exhausted. The coverage provides an additional layer of security to businesses that are at risk for being sued for damages to other people’s property or injuries caused to others in an accident. Many times adding an umbrella policy is a more cost effective way to add additional coverage to your policies.

8 Reasons Why Insurance is Crucial for Small Business

There are many reasons why a business needs to carry insurance coverage. In its most simple form, insurance protects a business from financial loss due to an unfortunate emergency, accident, or unforeseen event. Now there are many different types of insurance a business may need. Some businesses may need multiple types of coverage, some businesses may be able to get by with a bare bones package of coverages. Partnering with an independent insurance agent is one of the best ways to determine what types of coverage you need and what types of limits are best for your business.

Insurance is Required for a Loan

Banks require a business to carry insurance in order to qualify for a loan. If you think about it lenders want proof of insurance before you buy or build a new facility in order to safe guard all assets. To get access to cash for your business you will need to have certain types of insurance coverage. Without insurance, a business will be forced to fund its own expansion with cash on hand.

Some Forms of Insurance are Required by Law

In most states, Workers Compensation and General Liability Insurance is required by law for most business in most states. Each state has their own rules and regulations that offer some exclusions for some types of coverage. It is important to check with the proper state governing body within the state you operate in to make sure your business is properly insured.

Insurance Protects Against lawsuits

Today’s business environment is a very litigious society. If you stay in business long enough, more than likely your business will be sued in some form or fashion. When a business faces a lawsuit, even if your business wins the suit it can amount to an enormous sum in legal fees. Insurance coverage can reimburse your business for these costs.

Insurance Can Protect Your Employees

A business depends upon their employees to make the business work.  Building a healthy workplace culture is crucial to success no matter what industry a business operates in. Insurance can add to the trust a business has with its employees.

Your business depends heavily on the knowledge of one person

If you operate a business that depends upon the talents of one or a few key employees, it is necessary to carry Keyman Insurance. Keyman Insurance is a policy designed to cover the life of a key employee for a monetary value so in the event of an untimely death of such key employee, the loss to the business will be recouped through monetary assistance.

Most Contracts Require Insurance

When it comes to contracts, insurance is required by both parties in order for the contract to be valid. Some examples of scenarios where insurance is required include:

  • A business rents a facility instead of owning the building outright.
  • A business borrows money to finance buildings or equipment.
  • A business enters into a contract where the client specifies that insurance coverage in the event the deal does not go as planned.

A Business Cannot Predict The Future

No matter how much experience a professional has there are unknown occurrences that no one can predict. Regardless of whether the occurrences are a natural disaster, injured employees, lawsuits, or damaged equipment; it is impossible to predict when one of these claims will occur. Insurance coverage can protect your business in the event of an act of god.

Insurance Grants Peace of Mind

Business owners and leaders face an enormous amount of pressure. Insurance allows those leaders the ability to ease some of that pressure because they can rest assured that an insurance policy will help the business become whole again in the event of a serious occurrence.
 

Business Owners Policy

3  Reasons why Small Businesses Need a Business Owners Policy (BOP)

A Business Owners Policy, typically includes three types of insurance. Those three types of insurance include Property, Business Interruption, and liability protection. There are additional coverages your business can purchase to tailor the policy to fit your business’s specific needs. Two common additions include inland marine and data breach coverage. No matter the size or scope of your business, a BOP is almost always the best way to properly insure your business. Here are 3 reasons you should consider a BOP.

BOP

 

A BOP will ensure no gaps in coverage

Because with a Business Owners Policy, you bundle several products together, your business is less likely to have a claim not be covered because of a gap in coverage. A gap in coverage occurs when you purchase two products from different carriers and each carrier has an exclusion to their policy. If both policies have an inclusion for the loss, it may cause the loss to not be covered at all. Even if the loss is covered it can slow down the response time for the claim because the insurance carriers have to determine who is ultimately responsible for the claim. When you purchase a BOP, it will speed up the amount of time to process a claim and do the best job of preventing a gap in coverage.

A BOP will make insurance more affordable

Keeping expenses as low as possible is extremely important for the long-term success of any business. A Business Owners Policy allows you to keep the price of premium lower because insurance companies are more likely to dig deeper for credits and discounts when they know they are quoting multiple policies through your business.

A BOP can be modified to fit your needs

Business Owners Policies are designed with a specific industry in mind. Insurance carriers have loads of data about claims in each particular industry and with that data they know with a high probability which coverages each industry is most likely to need. This data can help a business owner to know what types of insurance they need and what types they can do without. If your business is an exception to the rule, your insurance agent can help you fine tune your specific package to meet the unique needs of your business. This is something not offered from most traditional insurance policies.

 

Gun Clubs and Shooting Ranges.

What are the liability concerns for Gun Clubs and Shooting Ranges?

Gun Clubs

Gun Clubs and Shooting Ranges are businesses that provide places for firearms enthusiasts to practice firing various types of firearms.  Some gun clubs and shooting ranges are indoors and allow shooting primarily with handguns at close distances. Other facilities are much larger. They may include outdoor facilities that allow shooting at long range distances.  A majority of these facilities offer lessons and concealed carry classes for beginning firearms enthusiasts’.  Not all facilities offer sales of weapons and accessories, rentals of weapons and even repair for damaged weapons; but those that do face additional liability.  Still other facilities offer periodic tournaments and competitions. Each of these aspects of the business bring with them additional risks.  Depending upon the business activities of each individual gun club or shooting range the liability needs for each business can be drastically different.

Gun Clubs and Shooting Ranges are rising in popularity. Make sure your business is covered properly by reading myinsurancequestion.com

Workers Compensation Risks for Gun Clubs and Shooting Ranges

Workers Compensation Exposures at gun clubs and shooting ranges are similar to many facilities open to the public, but are different in some aspects. Slips, trips and falls are common causes of injuries in these facilities, but there is an increased level of risk when a firearm is involved.  Injuries that involve a firearm tend to be much more severe in nature.  Businesses that operate in this industry typically have a normal frequency of claims, but those claims do tend to be more severe. Because of this elevated amount of risk, all staff need to be thoroughly trained and required to wear proper safety equipment.

Find the answers to your liability questions about Gun Clubs and Shooting Ranges at myinsurancequestion.com

Safety concerns for Gun Clubs and Shooting Ranges

Employees at gun clubs and shooting ranges face both short term and long term risks. Firearms are loud.  Very loud in some cases.  Ear protection is important to protect the long term hearing health of your staff.  Providing the ear protection for your employees and having a program in place to ensure they are actually wearing ear protection is essential to the long term health of your employees and the health of your business. Also, eye protection should be worn when in the presence of live fire. Again, it is wise investment for the business to provide proper safety equipment because it will ensure your employees are wearing the proper equipment.  Additionally, if you require the employees to purchase their own equipment it can develop a bad attitude among the employees about the safety equipment. Spending additional investment on adequate safety and training programs can go a long way towards keeping your staff safe.  A safe staff is a happy and productive staff. Taking additional time to protect your employees will help them be more productive and can prevent a costly insurance claim.

 

Small Business Insurance

It’s human nature for a business owner to wonder how much and which types of small business insurance coverage their business actually needs. To be successful, a business has to be comfortable with some amount of risk. Taking the first step to open a business is a risk.  With that simple fact, one would have to assume a small business owner is comfortable with some amount of risk.  Now how much and what types of risk the business owner is willing to take are completely unique to the industry the business operates in and the personal philosophy of the business owner.

Coffee shops need Small Business Insurance. Find out the latest information at https://www.myinsurancequestion.com/

Here are 5 insurance policies every business should secure.

General Liability

General Liability insurance protects an organization from damage to third parties who are not associated with the business. Third parties may include customers, the general public, vendors or anyone that could potentially be damaged by the actions of your business.

Workers Compensation

Workers’ compensation insurance is similar to general liability except it deals only with your employees.  Workers comp is the ‘exclusive remedy’ for injuries that occur to employees as a part of normal business operations. This policy provides medical coverage and some lost wages for injured workers who are hurt as a result of normal business operations.  Employers benefit from the policy by not having to worry about being sued for injuries that occur as a normal part of business operations.

Business Interruption

Business Interruption Insurance will protect a business in the event it is forced to be closed for an extended period because of another covered loss. The covered loss is an important part of this coverage. If you are the victim of a hurricane or a flood and you do not have coverage for that loss, the business interruption coverage will not kick in. This is typically included as a part of a business owner’s policy (BOP).

Employment Practices Liability Insurance (EPLI)

EPLI coverage is a type of insurance coverage specifically designed to protect your business from lawsuits relating to the employment process. Over the past decade employment lawsuits have increased significantly. If you stay in business long enough, chances are you will face an employment related legal issue. Your business can face one of these lawsuits even if the employees of that business have not done anything wrong. It can also cost an enormous amount of time and money for a business even if the business is found to be innocent.  An EPLI Policy can protect a business in just this case.

Commercial Auto or Hired and Non-Owned Auto

Driving risks are one of the most difficult parts of insuring a business. When driving a vehicle is involved in the work of a business, the frequency and severity of claims tend to rise dramatically.  Of course if your business owns vehicles and employees drive those vehicles as a part of their work, the business needs a commercial auto policy.  A business does not have to own a vehicle to face liability around employees injured while driving any vehicle.  If you have employees who use rental cars while they are travelling on business purposes than the business is liable for any accidents they are involved in while they are travelling.  This is because the purpose of the employee being where they are is because of the business function.  If you have employees who use their personal car for business purposes, the business is liable for any damage caused in an accident that occurs.  The employees personal auto insurance policy will cover the damage to their car, but the business will need additional coverage because the liability to other people  involved in the accident rests with the business.  These instances can be covered by a Hired and Non-Owned Auto Policy, which can be added to most standard business owner’s packages (BOP’s).

NCCI Workers Compensation Class Code 9014

Let’s Break Down Commercial Cleaning Companies

NCCI class code 9014, like most workers comp class codes, includes many different operations.  NCCI stand for the National Council on Compensation Insurance.  It is the main governing body for workers comp codes.  These classification codes generally include a variety of operations.  The classification manual from NCCI is written to include specific operations. It is called the Scopes Manual.   Over time, additional operations are added to each individual classification code.

Find the best answers to your Janitorial business question ( class code 9014 ) at MyInsuranceQuestion.com

Commercial janitorial services is the primary operation contemplated by NCCI class code 9014. Janitorial Services are specifically defined as keeping a building clean.  The businesses do this by routine dusting; mopping, vacuuming, waxing, or polishing floors.  The janitorial businesses also empty trash; clean and wash interior walls; clean, sanitize, and deodorize restrooms.   Office cleaning companies are the easiest operations to get insured (at the most favorable pricing).  It is reasonably easy to get favorable workers comp insurance for commercial janitorial companies.  Especially commercial janitorial companies that clean at retail and other light commercial spaces. It is difficult to get workers compensation insurance for commercial janitorial companies which specialize in cleaning at industrial settings.  Industrial settings frequently lead to the business having to purchase coverage from the state’s assigned risk provider.

Difficult Operations to Quote For Code 9014

Favorable workers comp insurance is more difficult to get for certain operations. For typical commercial janitorial companies, the NCCI class code 9014 allows for maintenance and minor repair work. Most insurance carriers will allow up to 10% of operations to fall into this arena. Floor waxing is another operation which underwriters consider. Some carriers allow as much as 25% of the business activity to be floor waxing.  If it is this amount or less the carrier will still quote accounts. Power washing is disfavored, and most carriers will decline to quote companies offering power washing.  Although it is an operation included in code 9014, at least if performed at ground level.

Code 9014 allows for residential cleaning if it is less than 50% of operations. A different workers comp class code is used for primarily cleaning companies.  That code is  0917. However, the majority of workers comp carriers will decline any account which does any residential cleaning as it is a less controlled work environment.   With that said, at least in some states, The Hartford will still quote commercial janitorial companies with some level of residential cleaning.  Having several years in business is generally an eligibility requirement in this case.

Insurance carriers favor interior operations over exterior operations.  A small amount of exterior operations can be allowed, but work from heights or power washing usually lead to declines from insurance carriers.  NCCI class code 9014 allows for ground level window cleaning.  Class code 9170 must be used for businesses that partake in any window washing above ground level.  This is much more difficult to get quoted by insurance carriers.

Cleaning Company Supplies for Small Business Class Code 9014

Other operations which are included in NCCI workers comp code 9014 include:

Exterminators

Some carriers will offer coverage to these businesses, but many will not.  If there is any live animal trapping provided in services almost all of the insurance carriers will refuse to provide workers comp insurance.

Chimney Cleaning

This function is acceptable to most insurance carriers if the service is performed using the vacuum suction method at ground level.  If the service includes work at heights for any employees, it becomes much more difficult to find a carrier who will quote workers comp coverage.

Residential Boiler Cleaning

This type of service frequently involves using vacuum suction equipment.  Any work involving boilers is difficult to get quoted by nearly all insurance carriers.

Swimming Pool Maintenance

A few carriers will quote swimming pool maintenance companies.  When the swimming pool maintenance company adds construction to their list of business operations, it becomes much more difficult to find a carrier willing to quote the business.

Pet Waste Removal Services

Pet waste removal businesses need to have sufficient payroll to find many carriers willing to quote coverage.  There is a small possibility to get this quoted by carriers on the voluntary market.

There are many different operations that can be included in NCCI Class Code 9014.  Especially for purposes of workers comp.

5 Types of Insurance every Daycare Center needs.

Finding good daycare is an enormous concern for families with children under the age of 5.  Compared to the previous generation there is an extremely large amount of families who now have both parents in the work force.  ‘According to the group Child Care Aware, about 11 million children under age 5 spend an average of 35 hours a week in child care’.  Because of this fact, the day care industry has exploded. With this explosion has come many new businesses needing help with their liability needs.  There are many things that can put a day care center at risk.  Here is a list of the 5 most common coverages a day care center should secure.

 

✓ General Liability Insurance
✓ Hired and Non-Owned Auto
✓ Workers Compensation Insurance
✓ Business Income with Extra Expense
✓ Commercial Crime / Employee Dishonesty

 

General Liability Insurance

GL Insurance is required by law in most states. Many business owners unfortunately think this coverage is all encompassing and it is not.  It is the baseline for coverage for your daycare business.  It will cover your businesses liability for normal bodily injuries from things like slips and falls.  It can also cover property damage that occurs to third parties on your property.

 

Hired and Non-Owned Auto Coverage

If your business owns and uses vehicles as a part of your business you will need commercial auto coverage, but if you have employees who use their personal vehicle or rented cars you will need to secure Hired and Non-Owned Auto Coverage.  This will cover the liability your business faces as a result of any accidents you or your employees are in while on company time.

 

Workers’ Compensation Insurance

Workers Comp is another coverage that is required by law in nearly every state in the country.  It is similar to General Liability except it deals with bodily injuries to your employees. When an employee is injured on the because of normal business practices work comp coverage will cover a portion of their salary and any medical costs as a result of the injury.  Each state has their own laws governing how to administer workers’ compensation coverage.  For this reason, it is important for you and a key employee to know the process to properly help your injured employee get the care they need and get back on the job quickly.  Your carrier can help you with this both before you have an injured employee and when a claim occurs.

 

Business Income with Extra Expense Coverage

Business Income with Extra Expense Coverage is a type of commercial property insurance that covers the loss of income suffered when damage is caused to the property by a covered loss and it causes a slowdown or suspension of business operations. Coverage applies to loss suffered during the time required to repair or replace the damaged property and may extend to apply to loss suffered after completion of repairs for a specified number of days. Expense Coverage is an additional type of commercial property insurance that pays for additional costs in excess of normal operating expenses.  These are normally expenses that an organization incurs to continue operations while its property is being repaired or replaced because of damage from a covered loss.  Extra expense coverage can be purchased in addition to or instead of business income coverage, depending on the needs of the organization.

 

Commercial Crime / Employee Dishonesty

Commercial Crime Insurance is a type of insurance that is designed to help businesses deal with crimes committed by their employees. This type of coverage typically covers several different types of crimes, such as: employee dishonesty; forgery or alteration; computer fraud; funds transfer fraud; kidnap, ransom, extortion; and money orders and counterfeit money coverage.  Employee Dishonesty Insurance is an additional coverage for employee theft of money, securities, or property. This type of coverage is written with a per loss limit, a per employee limit, or a per position limit. This is important to speak with your agent about what types of activities your employees partake in.  They can help you determine what type and how much risk you actually face.

10 terms to help you navigate the Workers Compensation System

Previously we wrote about several common terms related to commercial insurance here.  These were terms that a business owner should familiarize themselves with before renewing any commercial insurance policy. especially before interacting with their states workers compensation system.  Here is a list of terms you might come across related specifically to workers’ compensation insurance. Some of the terms may not have to do with your renewal specifically, but if you use the workers comp system long enough you very well may come across some or all of these terms.  

 

Aggravation:  Aggravation usually implies a fresh incident producing additional impairment to a previously injured anatomical region. Aggravations are usually not temporary.

Carrier Code:  The ten-character code that identifies a specific insurance carrier. W is always the first character in the code for a carrier of Workers’ Compensation policies. The codes for carriers of Disability Benefits insurance always begins with the letter B. Carrier codes are issued by the Finance Office of the WCB.

Claims administrator:  The term for insurance companies and others that handle your workers’ compensation claim. Most claims administrators work for insurance companies or third party administrators handling claims for employers. Some claims administrators work directly for large employers that handle their own claims. Also called claims examiner or claims adjuster.

Date of Injury (DOI): If the injury was caused by one event (a specific injury), this is the date of the event. If the injury was caused by repeated exposures (a cumulative injury), this is the date that the worker knew of should have known that the injury was caused by work.

First Report of Injury:  Each state has their own form that should be filled out anytime an injury occurs on the job. They should be reported no matter how minor the injury is. Insurance carriers track these forms to look for patterns of injuries and to help employers prevent injuries from becoming more severe or more common. Here is an example of one of these forms from the state of Wisconsin.  

Functional capacity evaluation (FCE):  An FCE is a series of tests administered to a workers’ comp claimant by a physical therapist or other health care professional. They can be beneficial in determining an injured worker’s capabilities and restrictions.

Independent Medical Examination (IME): Am IME is a medical evaluation that is used to resolve questions about your medical condition, including what treatment is necessary and the degree of your permanent impairment, if any. An IME is most often requested by the insurance company when there is a question about what treatment you need or what permanent disability rating you should be given.

Loss Ratio:  The relationship of incurred losses compared to the earned premiums expressed as a percentage. If, for example, a firm pays $100,000 of premium for workers compensation insurance in a given year, and its insurer pays and reserves $50,000 in claims, the firm’s loss ratio is 50 percent ($50,000 incurred losses/$100,000 earned premiums).

National Council on Compensation Insurance (NCCI):  NCCI is a U.S. insurance rating and data collection bureau specializing in workers’ compensation. Operating with a not-for-profit philosophy and owned by its member insurers, NCCI annually collects data covering more than four million workers’ compensation claims and two million policies.

Workers’ Compensation Audit:  A review of the compensation paid during the policy term to determine whether the exposure used to determine the original premium was accurate. If during the policy term, the actual exposure changed from the original estimate of what it would be, then an adjustment to the premium would be made at the time of the audit. If there was more exposure than the estimate indicated, then more premium will be charged. If there was actually less exposure than the estimate, premium will be refunded.

 

Why so many questions???

Shopping your Workers Compensation insurance –

4 Tips for the best and fastest results

Shopping insurance can be a daunting task. This is not commonly the case with other purchases. When you buy a couch, you just pick out one that feels comfortable.  One that fits your room or matches your style. You look for one that is in your price range and bam! you have the newest edition to your next super bowl party.

Shopping insurance, as much as we would like it to be, is not like buying a couch. Yes, you shop for a policy that fits your coverage needs and the budget you are able to afford, but there are some distinct differences to shopping for an insurance policy. An important factor to consider is the seller’s motives. When you buy a couch, the sale for all intents and purposes is over. The expense and liability of the company selling the couch is basically the same no matter who they sell the couch to.  When you buy insurance, the company who is providing that coverage doesn’t have the same benefit. Insurance companies use a variety of data to determine the risk of each person or business purchasing from them. The reason this information is used is because it has been shown somewhere in their data that this factor shows a correlation between certain variables and their likeliness of a claim. There are something you can do to help tip the odds in your favor. Here are four tips for making the quoting process easier for you and can help you get you the best price you desire:

Be Presentable: Dress your business up for Sunday church, not casual Friday. Show a clear outline of the purpose of your business and the kind of work you do. Equally importantly is to outline the work you won’t do. Make sure your marketing material and websites match this. There are few objections harder to overcome with an underwriter than a website that says you do something your application says you do not. Having these things in line is the best way to get a great first impression.

Be Open about the biggest risk: Every company has some operations that are lower risk than others. Insurance is as much about preventing claims as it is about paying them. The goal of the industry is to make your business whole after a claim, but wouldn’t it be better if we help you to prevent that claim from happening in the first place. Tell your agent about everything you do. If we don’t know that you are hanging from a rope 50 ft off the ground with a chainsaw in your hand, we can’t help find a better way to protect yourself and your employees in that situation (true story).

Note the details: Sometimes high risks are deal breakers, however sometimes in the right circumstances this can be overcome by showing the amount of this exposure. “Yes, we do work on roofs, however they are only flat commercial roofs and only ones with inside stair access or a permanently attached ladder with walls around the perimeter”. The controls you have in place for the highest risk work will be the most vital controls to focus on.

Don’t be afraid to show your hand: A lot of times people look at an insurance purchase like a poker game. If you are buying insurance as a commodity, then that’s what you should expect to receive when you want that policy serviced.

If you work on the same side of the table with your agent however they can work to get the best pricing possible. There is no better pricing than you can obtain from an insurance company than when the underwriter knows what they are insuring. When the underwriter is confident in your business and knows what price they have be at to earn your business they may be more aggressive with credits and discounts. There is much more savings to be had if you say “this is the premium you have to be at to earn my business” than there is with “show me your best price”.

4 Advantages to Pay as You Go Workers’ Compensation.

Small business owners have a lot to think about. Whether it be finding new clients, efficiently servicing the clients you do have, making sure your employees are paid on time, what type of insurance to offer your employees, to what type and how much insurance coverage is needed to adequately protect the business; a business owner must be involved in all of these decisions. One of the largest fixed costs most small business face is workers’ compensation insurance coverage.  In 48 out of 50 states this is required by law for nearly all businesses to carry this coverage. For this reason, any way to limit the cost of this coverage is helpful to a small business. Especially a start-up, a small business with a seasonal business cycle or a small business with cash flow issues.  Pay as You Go Workers Comp Insurance Coverage is one option to help these types of businesses.

Pay as You Go Workers Compensation is a great way for seasonal and cash strapped small businesses to free up cash.

Improves Cash Flow

Most Workers Compensation Policies require a portion of the policy up front to establish coverage.  After this initial payment the company pays 9 monthly payments beginning 3 months in to the cycle. The amount that is due up front is typically 25 or 30% of the entire premium. With the Pay as You Go Option most businesses, depending on revenue, can get policies in place for only a few hundred dollars. This allows the business to free up cash for more immediate business needs.

Increases Payment Accuracy

Pay as You Go Billing allows businesses to accurately pay what they owe each month based on real time payroll amounts. In a traditional work comp policy the payroll amounts are an estimate and during an audit at the end of the period they either are offered a refund for overpaying or they are charged for the additional amount of premium owed. Pay as You Go lessens this burden by allowing companies to pay a more accurate amount each month in real time.

Simplifies the Auditing Process

Because the amount of premium is paid in real time based on the payroll each month there are less inaccuracies during the auditing process. Typically the biggest problem during the auditing process stems from the business being improperly classified. This can cause a dramatic over or under payment if the business is supposed to be in a classification code that is dramatically more or less dangerous. A good example of this is related to driving risks. If a company has employees drive to many different locations to do a job as opposed to do a similar job at only one location without the employees operating a vehicle those are two class codes that are dramatically different risks and premium is dramatically different for those two businesses.

Allows the Business to Budget more effectively

When a business has a more accurate assumption of what their premium will be from month to month and throughout the entire year they can more accurately budget for other expenditures. This is important for new or growing businesses. If you are adding on to your location, thinking of buying new equipment or adding new employees than what you pay in premium will determine what and how much you can spend on these other parts of your business. Businesses that use a traditional workers comp policy may have to be more conservative in their growth because they need to keep more cash on hand for the auditing process.