Painters

Painters or painting, staining and decorating contractors fill a great role within the construction industry. As the economy continues to recover the need for painters continues to grow. With the growth in this industry comes an increase in risk and a need for more insurance coverage. The risks in this industry are much different than if you run an auto repair shop or an HVAC company.

There are certain types of information you will need for a general liability and workers compensation quote. Here are 5 policies every painting contractor needs to secure in order to completely cover them and their employees.

Find the best info about insurance coverage for painters at My Insurance Question.

 

General Liability

General liability insurance is normally the first coverage any small business purchases. This is no different for a painting contractor. In most states this coverage is required by law to be in business. General Liability coverage will cover your liability to third parties for accidents that occur as a part of normal business operations. For painting contractors who work at remote locations, it is important to speak with your independent insurance agent about what exactly is and is not covered when you are operating on the premises of a third party. If you interact with a general contractor who has many contractors operating at one location it is important for you to make sure all of the other contractors have the proper insurance required for the work taking place.

Inland Marine Coverage

Inland marine coverage will cover any specialized equipment you or your employees use as part of your daily operations. This is an important coverage to secure, especially if you have expensive specialized equipment, because most basic policies will not cover this equipment when it is damaged. For instance if you have a van or a vehicle with a trailer carrying extra tools, when a wreck occurs your commercial insurance policy will cover your liability to the other person hurt in the accident and to fix your vehicle, but it will not pay to cover your specialized equipment. This is a coverage your agent can help you determine if you need it or not. Depending upon how much the equipment costs, you may be able to do without this coverage.

Commercial Property Insurance

Commercial property insurance is different from your personal home owners insurance policy. It is different primarily because it is sold one of two ways: Replacement cost or on an agreed upon value of the property. It may be tempting to go with an agreed upon value to save on premium, but this is almost always a mistake. This is because the agreed upon value is usually what the property is appraised at currently. This amount does not include the cost to tear down the dwelling and remove all the debris after a disaster occurs. This additional cost can be extensive.

Commercial Auto Insurance

Commercial auto insurance is also different from a personal auto policy. Commercial auto can be purchased for vehicles your business owns, but it can also be purchased for employees who drive their own vehicles or rented vehicles while on the job. This type of policy is called hired and non-owned auto coverage. Again, with this coverage it is important to take some additional time to speak with your agent about the daily operations of your business. If you are honest with them about what you do on a daily basis they can do their best to prevent occurrences from taking place where your business or your vehicles are not covered.

Workers’ Compensation

Workers compensation insurance is the second coverage a business purchases because like general liability insurance it is required by law in most states. Workers compensation is like general liability, but it applies only to your employees and not to third parties. If your employees are injured at work as a part of what would be deemed normal business operations, workers compensation coverage will pay them for some of their lost wages (typically 60%) and medical expenses. Depending upon the state in which you operate in and the accident occurs, there are time limits on how long the employee can collect workers compensation benefits. Having adequate safety programs and a strong return to work program will help your business from experiencing excessive damage to your experience modification rating.

 

Here at My Insurance Question you can find the best advice on the insurance policies all painters need.

Recommended Insurance Programs for Painters

Minimum recommended coverage:

•   General Liability

•   Inland Marine Coverage

•   Property Insurance

•   Commercial Auto Insurance

•   Workers’ Compensation

Other coverages to consider for Painters:
Business Personal Property, Employee Dishonesty, Contractors’ Equipment (Inland Marine), Umbrella Liability, Commercial Auto Liability, Goods in Transit, Environmental Impairment Liability, Stop Gap Liability and Employment Practices Liability Insurance (EPLI).

Workers Compensation Insurance in California

What makes the Workers’ Compensation Insurance System in California unique?

California Workers' Compensation Insurance

 

California is currently the most expensive state in the country for employers workers compensation coverage. Rates throughout the state have continued to rise over the past 10 years. Much of the increased costs are caused by the rising costs of medical coverage and state laws.

State law, like in most states, requires all employers to provide workers compensation coverage to all employees of a particular company.  Failure to purchase workers comp coverage is a criminal offense in California. Employers may receive a fine of $10,000 or more and up to a year in a county jail.  It is also illegal for any employer to pay a medical bill directly to the provider. A claim form (DWC Form 1) must be filed with the insurance company for any injury requiring more than first aid care.

San Francisco, California

As you may know, California has the largest economy of any state in the United States.  This brings an extraordinary amount of businesses to the state who have an extraordinary need for commercial insurance.  Because the states mandates that employers carry workers comp coverage there is a lot of competition to quote the coverage of those businesses.  In most cases this increased competition would bring the cost of the coverage down, but not in the case of workers compensation insurance.  The main factors driving prices up in the state of California are the state regulations that many would say favor the worker over employers.

According to the Insurance Journal there are steps being taken to curb the increase in workers compensation costs throughout the state of California:

“Claim frequency, claim administration and high medical costs are typically among the drivers of high workers’ comp rates. However, the state in 2012 passed a massive workers’ comp reform law, which according to its supporters seems to be working.

California’s Workers’ Compensation Rating Bureau earlier this month submitted a pure premium rate filing to the California Department of Insurance proposing Jan. 1, 2017 advisory pure premium rates lower than the corresponding industry average.

The WCIRB submitted a rate filing that averaged $2.22 per $100 of payroll, citing in part legislative changes made this year that the bureau believes could help reduce costs. Senate Bill 1160 and Assembly Bill 1244 are both designed to remove medical providers convicted of fraud from the system and prevent them from filing liens.”

Additionally, a lot of business owners in California assume workers compensation is similar regardless of the carrier. Depending upon the industry you are in and the scope of the work you do within that industry, coverages can vary dramatically.  The cost of coverage for the same classification codes can vary significantly between carriers. This is because the appetites for certain industries and types of coverage change from year to year and carrier to carrier. For example, after Hurricane Katrina many insurance carriers were very conservative when offering homeowners or hurricane insurance throughout the coastal areas in the southeast.  This was because of the damaging amount of claims the carriers had to pay out as a result of this damaging storm.

At some independent insurance agencies, they take the work out of finding an insurance company with quality coverage and affordable rates. They do this by being able to quote you coverage from several carriers as opposed to just one or a select few.  In short, they shop the insurance so you don’t have to. Partnering with a good independent insurance agent with whom you trust and speaking candidly with them about your business can go a long way towards saving on workers compensation insurance in California.

Santa Monica, California

NCCI Workers compensation class code 9014

Let’s break down NCCI workers comp class code 9014

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

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.  Over time, additional operations are added to each individual classification code.

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.

Favorable workers comp insurance is be 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 NCCI 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.

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.

Have a Work Comp Audit soon?

Here are 7 tips for a Smooth Workers Compensation Audit

Find the best advice for a smooth workers compensation audit at myinsurancequestion.com

Each year all businesses must go through a workers compensation audit process. If you are like most small business owners, this is not one of your favorite parts of owning a business.  The process can be long a tidious, but the more prepared you are for this process, the more quick and more smooth the process will be. Consulting with your independent insurance agent can help you prepare for the process and make sure the audit is done well the first time through the process. Here are 7 ways to ensure this process goes as painless as possible.

Communicate with your agent.

Open communication with your insurance agent is essential to a smooth workers compensation audit. This is a reason why it is important to consider an independent insurance agent.  An independent agent is not as closely associated to the insurance carrier.  They can help you prepare for the audit and negotiate on your behalf if anything does not go in your favor. Open communication throughout your relationship with your insurance agent is essential to a satisfied experience during your small businesses workers comp audit.

Have paperwork prepared in advance

Having all necessary paperwork prepared in advance of your audit will make the process move as smooth as it possibly can.  This includes any and all payroll and employee records.  Job descriptions need to be included for each employee and their annual weeks, days and hours worked.  The more detailed the better.

Payment and cash disbursement records,

Throughout the year it is important to keep a record of all payments and cash disbursement.  Not having these available and organized is a good reason to have the auditor dig a little deeper. The more open, honest and organized you are throughout the entire audit process the more smooth the process will be.

Certificates of Insurance 

In order to ensure a smooth workers compensation audit, make sure to keep a detailed record of all needed certificates of insurance for any and all sub-contractors or independent contractors your business used. The primary reason for providing these documents is that if you do not, these contractors will be listed as employees and it can substantially raise what you pay in premium.

Experience Modification Worksheet

The experience modification worksheet is a document that is published annually by the rating bureau in your state.  It covers the loss history for your business during the most recent three-year period, not including the most recent year.  The most recent year is not included due to overlap from some claims not being closed.  If you have had a large claims or a large amount of minor claims during any year it is important to have this worksheet available in order to show the true loss history of your business.

Make yourself available for the exit interview 

After a typically smooth workers compensation audit there is an exit interview at some time.  It usually lasts several hours and is a way for the auditor to ensure they have all the necessary information to accurately audit your business. The more up-front you are with the auditor the more smooth the process will be.

Respond promptly to auditor follow-up questions  

There will more than likely be questions you do not have the answer to, the auditor will have for you during the audit.  The more quick and more thorough you respond to these questions the more the auditor will work with you to promptly and accurately finish the audit process.  The time period after the audit, before the auditor will finish the process, normally takes two to three weeks. There may be additional questions that need clarification.  This may be a frustrating part of the process, but the more accurate the audit is the better it is for your company.  Your agent can help you with any of these questions if you are having a trouble finding the exact information to satisfy the auditor.  It is also important to keep in mind that for security purposes, the auditor does not keep your payroll records.  You very likely will be asked to provide additional information or records that you have already provided.

An Accurate audit is in your best interest, moreso than a fast audit.  This process is frustrating even during a good audit.  It will take time away from your normal work, but it is within your best interest to ensure your audit is fair and accurate. Keep a positive attitude and consult your independent insurance agent in order to ensure your audit process goes as smoothly as possible.

New Business- Starting from scratch

Ideas for Start-up Business Plans

So you have decided to (or maybe you are still considering) taking a leap most of us only dream of.  That leap is to start your own business. Perhaps you have worked for someone else in your trade for several years and want something of your own.  You may be fresh out of school (or still in school) and want to get started early.  Maybe you just have a unique opportunity to start your own business. If this is you than you are probably looking at what you need to start:

  • Start up capital
  • Supplies
  • Office/shop space
  • Sales opportunities

These are things all first time business owners are looking for. One thing many new businesses put off until last moment is insurance. You will spend thousands of dollars just to start up your dream of owning your own business; you don’t want one accident to take it all away from you. Below are several insurance policies that can protect you from claims that could easily ruin your dream of owning your own business. Here we will go over the basic areas that you want to look at for starting your own business, and when you want to start looking.

First, Why is this important? Claims with new businesses can be more devastating for a few reasons.

  • The controls that are in place to prevent/reduce the extent of claims/liabilities are less established. Many of these types of firms can be started in a home office.
  • New businesses are many times less defined in their operations, which can bring the operations in to areas the business owner may not be as familiar with. These areas they may not have as much experienced in. This can bring up more risks a
  • Some businesses do not have an established LLC or Corporation established. Regardless of the insurance policies you have, it’s important to work with your attorney and CPA to make sure you choose the business entity type that works best for you. This separates your business liabilities from impacting your personal assets. It is bad enough if the incident you could have protected closes your business, but it is a much worse situation if the same incident causes you to lose your house or your savings.  

 

Here are a few policies we recommend you start out with pretty early on:

Commercial Auto – Commercial auto is a topic in itself and oftentimes one of the most overlooked policies by a new business owner since many people just use their personal auto’s and don’t see this as something they need. This might not be the first new policy you look to get, it should be the first insurance policy you likely already have that you will want to look at changing though. If your using your personal vehicle for business purposes, at the very least you want to make sure your agent and insurance carrier is aware of that and that you have business use on your policy, upgrading your personal auto policy to a commercial auto policy might be a couple bucks more, but in many cases the difference is a lot less than you may expect, plus, a less expensive policy that doesn’t cover what you need isn’t really that valuable anyway.

General liability –  Starting a business, general liability is the first policy most companies look for. If you’re a retail store its sometime referred to as “slip and fall coverage” to cover liability from bodily injury on your premise. Keep in mind, some of these policies only do that and might not cover all/any off premise damages. These policies come in a variety of forms and coverages and the pricing typically reflects that, that’s not also to say you cant shop to make sure you’re getting the best value. This for some business types can be packaged into a Business Owners Policy that can cover property and other additional coverages your company needs like Data Breach, EPLI and Hired/Non owned auto liability.

Workers Compensation –  For starters let me clear a couple things up first: Workers Compensation is not automatic; it’s not something automatically gets taken out of payroll without you getting a policy in place first. This policy covers employee injuries when hurt on the job for medical expenses and a portion of lost wages. For some high risk businesses like heavy manufacturing, construction and transportation this can be one of the most expensive and hardest policies to get competitive quote’s on and can be frustrating for businesses owners that just want to buy the policy. The key in the beginning is getting a policy in place, pay your bill on time, and keep continuous coverage. Once you have a prover record, especially for 3 years with coverage in place the market is a lot easier to get coverage for companies that have established. If you are a labor intense business the pricing can seem very high, the expense for covering a claim out of pocket, and fines from many states can be just as expensive if not more than your premium would be anyway. This normally isn’t needed until you hire an employee, but sometimes contracts can still require it which can open up more business opportunities for your company.

Professional Liability –  For some companies your biggest risks aren’t necessarily a customer slipping and falling, or an employee injuring themselves. Many professional firms have what can be equally as damaging of risks to them. The obvious ones are your Physicians Medical Malpractice, your insurance agents and accounts have Errors and Omission’s insurance to cover mistakes or professional errors made. Little mistakes can make huge claims but there are some companies you don’t think of needing this like Printing companies, Website Developers, IT Companies, Bookkeeping and Marketing Firms. Website Copyright infringement, or a faulty code in a software program that causes a glitch or even worse a breach could be a huge expense and could mean huge liability on your company.

 

Every business owner is worried about protecting what they own. The property you own can be devastating if its lost, damaged or stolen. However, the liabilities you take on during the everyday course of your business operation can be even worse and costlier. Even if you don’t own any property. There are insurance policies to cover the obvious, but also many things you wouldn’t think of. If there is a chance of an injury, fire, something stolen, or decreasing in value for something other than every day wear and tear (heck maybe there’s a policy for that too) there is likely an insurance policy for it. Working with a Professional Insurance Agent that can give you options and help guide you on the coverages that would be most important to you.

How to properly prepare for a Pay as You Go Workers Compensation Audit

Pay as you Go Workers Compensation Audit

Get the best information about a Pay as You Go Workers Compensation Audit at MyInsuranceQuestion.com

Workers Compensation Insurance policies require an annual payroll audit to be completed. The purpose of the audit is to verify payrolls for the policy period, confirm operations (class codes) and to check for 1099 sub-contract labor. 1099 sub-contract labor can be added to your audit if they are uninsured. In order to exclude a 1099 from your workers compensation audit, they must meet the standards for an independent contractor and must provide a valid workers compensation certificate or state approved exemption. The workers compensation auditor will typically contact you by mail or phone to set-up a time to gather the necessary payroll related documents. There is typically a small period of time to complete the audit otherwise it’s submitted as non-productive. When the audit is non-productive the insurance company produces an “estimated audit” that increases payrolls over the original estimate and a notice of cancellation. The business owner then has to “reopen” the audit and complete within the time frame determined by the cancellation date. If the audit remains non-productive and the policy cancels, the insurance company then reports to the workers compensation bureau. Due to the unproductive audit the workers compensation bureau can prevent coverage from being purchased for that business until the audit is completed.

Typical payroll documents that are provided to the auditor includes the 941’s or Quarterly Tax Reports for the nearest 4 quarters of your policy period. Most policy periods do not work perfectly with the start of a new quarter, therefore, auditors collect the closest quarterly tax reports and commonly use a Payroll Summary for the exact time period to verify payrolls. Most auditors are not familiar with the Pay as you Go model, therefore they audit using the traditional method only, using the Quarterly Tax Reports. The use of the payroll summary for the exact time period is VERY IMPORTANT for the Pay as you Go billing option. Since the business owner is paying premiums based on actual payrolls it’s important to provide the payroll summary for the exact time period. It’s important for the business owner to communicate the need to use the payroll summary for the exact time period at time of audit. After the audit is completed the insurance company will generate a document that shows the payrolls used to complete the audit. If those payroll figures do not match to your payroll summary report either contact your agent for assistance to dispute OR the insurance company. Explain that your billing is Pay as you Go and the auditor’s results do not match your payroll summary.

In addition to payrolls, the auditor is confirming the employees classification is correct. For most businesses all employees belong in 1 of 3 classification codes. Each industry has a workers compensation code that is assigned.   Some employees belong to a classification code that is not included in the main code OR their hazard is minimal, therefore classified separately. If an employee is performing job duties that belong in multiple workers compensation codes, typically those wages are either classified to the highest rated exposure or divided between multiple exposures. In order to separate payrolls, the business owner has to provide the auditor with verification of the hours worked in each code per employee.   The two best methods for accomplishing this is a payroll system that documents the job description and the hours worked for each employee. Otherwise the business owner will need to use a Log Book to document the jobs and hours worked for each employee to properly separate. The clerical workers compensation code is one of the few codes that cannot be separated with another job duty. Clerical is 100% or nothing.

6 Ways to Keep Your Small Business Safe

Safety can mean a lot of things to a lot of people. In the business world, the perception of safety can mean a lot of things to a lot of different business owners. What it takes to properly protect your business should be something that is taken very serious by all of the decision makers within your business. Safety can mean securing the property at night when you are away from the building or it can mean properly training your employees to use the equipment they will be using as part of their job. It can even be having the proper policies in place to prevent your business from a data breach. There is a laundry list of things that can be included in your businesses strategy to properly keep your business safe. Here are 6 strategies to keep in mind when protecting your small business.

Hire the right people

It may seem obvious, but the people you hire are your most precious asset. Making sure they are the right people can go a long way towards the safety of your business. There are many ways you can go about checking up on your applicants. Criminal background checks, motor vehicle driving records, investigating their references and checking their college transcripts are all great places to start. Sometimes you will have to rely on your gut reaction to them from an interview, but taking extra time to make sure the people you hire are the right people will start your business off on the right foot when attempting to keep your business safe.

recruiting-new-employeeshire

Train people effectively in the first place

Once you have hired the correct people for your organization it is not enough to just set them loose. You must properly train them in the art of protecting your business the way that is best for your organization within your industry. and think everything in your business will remain secure. They need to know what is important to your organization and how you expect them to conduct business. This may seem obvious, but far too many business owners forget this part of their organization. An employee in HR or Marketing might be coming to you from another industry. They may not see the potential risk that exists for your business in your industry. Take the financial services industry for example. This industry deals with every bit of a customers’ sensitive information, most importantly their financial accounts. If they are coming from another industry where the business does not have access to these types of materials’ they may not fully understand the need to safeguard everything they do. Another industry, like commercial cleaning, has risks where they are allowing employees in to a business after hours when they are the only people in the facility. This opens up the possibility for theft or access to internal computer networks. Training new employees properly will prevent risks from getting out of hand later.

Have well-documented, well thought out Safety Programs

Safety programs entail a lot depending on your business. Don’t be afraid to make them more or less extensive based on the needs of your business. It should start during the initial training/onboarding process for all employees. If you make it clear to them from the beginning that safety is important to your business than they will implement this in to their daily work routine. Like many things in life it is always easier to start tight and loosen up than to start loose and try to tighten up later. That works for a safety program as well.

Defensive Driving Class

Defensive Driving Program

Having a Defensive Driving Program in place can make drastic difference in the frequency and severity of accidents that occur among your employees. If you have employees that operate a vehicle as part of their job they need to have their driving record pulled at least once a year. As part of the hiring process, many businesses require employees to pay for the driving record themselves. This can help weed out applicants with the worst driving records. It saves you time and money on the front end from going through the hiring process with someone who will not be getting the job because of their driving record.

Buying the proper insurance.

Having proper insurance is essential to any good business plan. How much and what types of insurance a business needs, is completely dependent upon the business owner. It depends on how much risk they are comfortable taking and what types of risk they actually face. This is something a good independent insurance agent can help you determine. Many business owners face risks they do not realize and that is where having a long honest conversation with your agent can help you get properly insured. In most states and in most industries it is legally required to carry Workers Compensation and General Liability Coverage. But there are several other coverages that may be necessary depending upon the industry you operate in. Most carriers have programs set up for each specific classification code and they are called Business Owners’ Policies. In most cases this is the best way to go about purchasing commercial insurance.

Take cyber security seriously

Cyber security is a real threat to nearly all businesses. Regardless of how technologically advanced your business is there is a threat in the cyber world. Two of the largest data breaches in history were first started by small businesses first being hacked and allowing access to a larger network of customers through a vendor partnership. Many business owners think data breaches occur through highly technological criminals hacking in to a computer. That is the source of many data breaches, but many start with something as simple as someone leaving out a post-it note with their username and password or an employee taking a laptop home for remote work and the laptop getting stolen out of their car. Those are real risks that any business can have and they can cause a huge cost to your business when they do happen.

Get the best answers to Cyber Security questions for small business owners here at my insurance question.com

What is the Assigned Risk Provider?

The assigned risk provider is also frequently referred to as The State Fund or The Pool

Workers’ Compensation Insurance Coverage is required by law in nearly every state in the country. The basic purpose of the Workers’ Compensation Insurance is to provide wage replacement benefits and medical treatment for employees who have been injured on the job. Workers Comp prevents the employer from bearing the costs of injuries that occur during normal business operations.

Each state has their own method for how they go about determining rates on workers’ compensation class codes. Most states partner with the National Council on Compensation Insurance (NCCI) to determine rates for different class codes. Some states; like Indiana for example, have their own rating system administered by a government organization. Most use the basic guidelines of the NCCI system.

Every state also has a different way for how they go about setting up a provider of last resort for the employer’s of the state. This provider of last resort is also referred to as the assigned risk provider, the state fund or sometimes as the pool. This provider is designated as the provider of last resort for businesses who cannot find coverage through the open market. It is typically more expensive from this provider for a number of reasons.

Businesses that end up having to purchase coverage from the assigned risk provider, may not be able to find insurance coverage for a number of reasons. Lots of times it is because the business operates in a classification code that carries more risk than most carriers are willing to take. Sometimes it is because that business has had too many claims within a short period time. It also is frequently because the business just does not generate enough income for the amount of risk in their industry. States usually have a requirement that the business has to try to obtain coverage from a certain number of providers on the open market before they can apply to the assigned risk provider. Usually that number is two or three providers.

There are three main ways states go about providing employers with an assigned risk provider. Some states provide their own fund, some use NCCI and some have a partner carrier who guarantees coverage for employers who cannot find coverage on the open market. Typically states who have a strong assigned risk provider who competes with the open market enjoy the best rates on workers’ compensation insurance. There are different ways to provide this strong provider, but typically the stronger this provider is the lower the rates employers pay.

Utah is an example of a state who has its own fund. This fund is called the Workers’ Compensation Fund. This fund dominates 57 percent of the market and is the main reason Utah enjoys some of the lowest rates in the country for workers comp coverage. Colorado has a partnership with a company called Pinnacol. Pinnacol was begun around the time workers’ compensation became a requirement in the state. It was designed in partnership with the state government so there would always be someone guaranteeing coverage and competing to keep the rates reasonable for the employer’s of Colorado. Both of these states enjoy some of the lowest rates on Workers’ Compensation Insurance because of their strong Assigned Risk Providers. New York is an example of the other end of the spectrum. New York has its own state fund administered as a non profit agency. New York also has very difficult regulatory compliance regulations for workers comp. These regulations force many carriers to simply not offer coverage in the state. All of these factors combine to cause New York to have some of the highest workers compensation rates in the entire country.

So administering the state fund is left up to each individual state. Again there are three main ways the states go about doing this. Some handle it themselves, others partner with an outside carrier and some contract this service out to NCCI. All three ways can be effective ways to keep costs down for the employers of that state. The strength of these pools goes a long way towards determining what employers across the state pay for workers compensation coverage.

Lawncare & Landscaping

Lawncare and landscaping businesses are similar yet very different.

As a business owner of a lawncare or landscape company you might have had to shop for insurance. You might have had to do this to either to meet state requirements or to make sure your business is protected just in case an injury occurs to an employee. Recently I have taken many phone calls from owners of small lawncare or landscape companies that have been asked by a client, sometimes even a home owner to provide proof of work comp coverage before they are grated the job or bid. Whether you have a small or large lawncare company chances are you have had to make a call or two to obtain a work comp insurance certificate.

When going through this process have you ever wondered how your company is classified? There are two class codes that contemplate lawncare and landscaping, 9102 and 0042.  The most qualifying question to determine what class code you are in is, does your company primarily engage in maintaining already existing lawns and garden beds or is your business designing and installing landscape or flower beds. Another deciding factor is if there will be any installation of paving stones or rock beds. The class code 9102 is designated for lawncare or maintenance of existing lawns. Snow removal will also be covered under 9102 and should be discussed if there is snow removal operations in the down season of lawncare. 0042 class code is designated to design and installations of lawns and beds. Any sod laying or pavers would also fall under the 0042 class code. However both class codes do contemplate the applications of fertilizers and insecticides.

One aspect of both classes of business, that I feel I must bring up, is tree trimming. If at any time there is tree trimming the class code 0106 would need to be added to the work comp quote. Designated payroll can be added to that class or it can be added on an “if any” basis. I also must fully explain that the 0106 class code is considered high risk. It is very difficult to place with an insurance carrier.

When calling in or submitting an online quote, the first couple of questions back to you will most likely be:  How many employees not counting the owner are there and what type of lawncare are you providing? If the answer to the first question is there is only the owner, which some times is the case, that would be an owner only policy. If there is one employee or more there will need to be included a total annual payroll. At that time we would figure out how to best classify you. lawncare or landscape will find the best price and insurance carrier for your company.

Experience Modification Overview

The Experience Modification Rate will only apply to your workers’ compensation policy. Typically you will not qualify for a rating until you have been in business for 3 consecutive years with workers’ compensation insurance coverage. Your Experience Mod compares your workers’ compensation claims experience to other employers of similar size operating in the same type of business. If you have fewer claims than other companies of the same size and industry you will receive a lower Experience Mod Ratio. This ratio is used against your annual premium and results as a discount. On the flip side of that is if you have higher claims in a four year time period then it will result in a higher experience mod. The claims history will generally lag at least a year. What this means is your current claims history, whether good or bad, will not have an effect on your renewal experience mod. The modification only calculates policy periods that have been completed. So if you have a good year this year it will not help with your experience rating for two years. On the same note if you had a bad year it will not effect you for two years as far as rating goes. Experienced companies that monitor their workers’ compensation premium understand and utilize their experience mod annually. Understanding your experience modification rating and monitoring is another area in which you can reduce your workers comp costs. Companies who effectively manage their safety programs not only understand how this works, but also have assigned someone to monitor this on a regular basis. It has a direct correlation to how much you pay in work comp premiums.

Where to find your Experience Modification Rate: You will receive an updated Experience Modification Rating Sheet each year prior to your policy renewal date. Your experience mod is also listed on the declarations pages of your workers’ compensation policy. This will reflect last years rate. You will want to contact the National Council on Compensation Insurance (NCCI) directly or your respective State Insurance Bureau. They are able to send you a copy of your new rate, which will be used for this years premium cost. If you don’t know how to find it reach out to your insurance agent and they will be able to point you in the right direction. Most companies whose annual premium are in excess of $5,000 and have been in business for more than 3 years will receive an Experience Modification Rate. The requirements could vary per state and will if you have an individual bureau that handles the rating outside of NCCI. Each year insurance carriers report to the calculating agency your class codes, payrolls and losses for the last five years. The computing agency uses three complete years of data ending one year prior to the effective date of the rating period. For example, a rating in 2015 normally will not use 2014 but would include years 2011-2013 in the formula. Don’t forget about your current years claims. These usually present the greatest opportunity for cost reductions. Remember this years claims will affect your Experience Mod next year.

How claims affect the Experience Mod:

Medical-only claims Claims that require medical treatment only are usually less severe so employers should not be penalized when they occur. Consequently, any medical only claims are reduced by about 70% before they enter the formula. You can take advantage of this by ensuring that injured employees remain at work when possible or return to work within the waiting period. This is where an effective claims management and return to work program can have a dramatic effect. Should you need help in establishing a program, Western National Loss Control Consultants can help.

Lost time claims The first $5,000 of a lost time claim is counted at full value. The dollar amounts after $5,000 are discounted. There is also a large claim cap limit to protect you from a catastrophic loss. Because the first $5,000 of each loss goes into the formula dollar-for-dollar, severity is a factor. A single claim valued at $20,000 has less effect on your Experience Mod then 10 claims valued at $2,000.