How To Decrease Workers’ Compensation Insurance Costs

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Workers’ compensation insurance protects business owners from the high costs of injury claims from employees. If an employee gets injured on the job, the cost of a lawsuit could detrimental to the financial stability of the business. With a workers’ compensation policy, those costs are limited. However, business owners still have to pay the direct costs or premiums for the policy. These direct costs can fluctuate depending on the type of business that you operate, compliance training requirements, and quantity of past claims. Keep reading to learn how to lower your workers’ compensation insurance costs. 

Invest In Injury Prevention 

To lower your workers’ compensation costs, you should invest in preventing injuries. Using the knowledge of safety experts, train your employees on workplace safety and hazards. Providing your employees with safe and secure working environments like Calhoun Super Structure buildings can also help to minimize the risk of injury. 

You can also instruct them on how to improve their instrument measurements with Durham Instruments at Depending on budget constraints, you can start investing with a pamphlet, course or booklet. Later on, these materials can be repurposed into a full set of videos or courses. The time and resources invested in these materials will have a return over the life of the company. As employees learn to keep their working environments safer, you can prevent costly claims to your insurance policy. 

Classify Employee Positions 

The workers’ compensation premiums are determined by the company’s positions. Since a construction worker has a much higher chance of getting injured than an office professional more concerned with a slip and fall incident, you should carefully classify each employee position. Companies that have a flat rate across all their departments could end up overpaying for workers’ compensation rates. For each employee, the rate is multiplied by every $100 of payroll. Especially for higher paid executives or managers, a rate reduction could result in significant savings. Ensure that your employee classifications are properly to lower your insurance costs. 

Perform Claims Due Diligence 

In the event of an injury, some due diligence can help lower amount paid out through the insurance policy. According to Todd D. Beauregard, a workers compensation lawyer, “In the United States, most employees who are injured on the job have an absolute right to medical care for any injury, and in many cases, monetary payments to compensate for resulting temporary or permanent disabilities.” 

When an employee gets hurt, document the incident. The documentation should include the location, conditions and causes of the injury. If there are any witnesses around, take note of them as they can provide clarification during a claim. Carefully investigate each claim made to your workers’ compensation policy. This due diligence will avoid any employees from being overcompensated. In turn, this would lead to lower rates for your insurance policy in the long term. 

Incentivize Employees To Return Soon 

After an injury, incentivize employees to get back to work sooner. There are several ways to encourage employees to get back to work. Firstly, you can start them in a less demanding position. This way, they can scale up their workload as they are recovering. Secondly, the company can provide accommodations that make it possible for the employee to get back to work sooner. For example, you can reduce the number of hours or modify the type of equipment they use. When employees return to work sooner, the workers’ compensation liability is limited. This will result in lowered costs for you and your insurance provider. 

Find Out Your Modification Factor 

Periodically, check in with your workers’ compensation insurance provider to negotiate your modification factor. The factor, also known as "Mod", measures the claims losses of your company compared to others in similar low or high risk industries. The insurance company will compare your company based on size, losses and number of claims. If you have fewer claims and losses, you could be eligible for a discounted rate. Your mod score will have to fall below 1.0. This indicates that you have a credit which entitles you to a discount on the premium. Contact your workers’ compensation provider to find out your current modification factor and determine if you can receive a discount on your policy. 

The direct costs of workers’ compensation should not become burdensome on business owners. In order to lower your premium costs, take all of these preventive actions. Start by training your team to create a safe working environment. This includes making sure your electrical systems are up to code to avoid outages or fire hazards and ensuring your pipes have Heat-Line protection to prevent freezing in cold weather. 

This will all prevent the cost of injuries before they happen. Next, match each employee’s roles and responsibilities to the correct employee classification rates. In an incident does happen, report it with detailed documentation. Perform an investigation to ensure that your policy does not overpay for damages. 

Moreover, encourage your injured employees to get back to work quickly with incentives. Finally, check with your insurance provider about lowering your rates based on the company’s modification factor. Following these steps, you can significantly lower your workers’ compensation costs.

I hope you enjoyed this blog post about how to reduce workers' compensation insurance costs through smart management.

Interested in more articles about insurance and worker's comp?

Read Related Resources:

A Basic Overview Of Worker's Compensation 

All About Workplace Safety And Small Business Compliance

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