The bad news is that workers’ compensation insurance is a cost that you have to take on. But that’s not really bad news, because it provides benefits to both you as an employer as well as your employees. The even better news is that you may be able to control your costs more than you think. Keep reading to learn how.
Can You Cut Workers Compensation Coverage?
Most employers have to have workers’ compensation coverage by law. It depends on where each worker is located. So if you have employees in Wisconsin, you have to follow Wisconsin laws. If you have employees in Minnesota, you have to follow Minnesota laws. If you have employees in two or more states, you have to have workers compensation coverage for each employee based on what state that employee works in.
Wisconsin employers have to have workers’ compensation insurance when they have three or more employees. There are no restrictions based on the industry or size of business as you might find in other states.
How Do You Figure Out Your Workers Compensation Rates?
There is no rate shopping when it comes to workers’ compensation insurance. While private insurers help to run the plans and handle claims, the rates are set by law. There are three steps to calculating your rates.
- Determine your industry. Different industries have different risks of having workers injured, so the first step is figuring out what industry you’re classified in. If you engage in multiple activities, you may use your primary or most risky activity.
- Classify each worker. You also classify each worker individually. A construction worker is more likely to get injured than an attorney, but both construction companies and law firms might have an office receptionist. The construction company might pay slightly more for a receptionist than a law firm since there’s the chance the receptionist could be around heavy equipment at some point, but the receptionist will cost less to insure than the construction workers.
- Determine your experience modification rate. The first two steps give you a basic rate that you can look up on a table. Next, you have to modify that rate for your business. If you have an average number of claims, you pay the base rate. If you have more or fewer claims, you pay a higher or lower rate. This is done by multiplying the base rate from steps one and two by your experience modification rate. A mod of 1.0 means you have average claims, and higher or lower means you have more or fewer claims.
What Can You Do to Save Money on Workers Compensation Coverage?
The main way to save money on workers’ compensation coverage is to promote safety. Training your employees on how to stay safe and giving them the safety equipment they need leads to fewer injuries and fewer claims. With fewer claims, your experience modification rate will go down, and so will your worker’s compensation insurance rates.
Your insurance agent can help you with advice on how to improve safety and programs you can implement in your work environment to promote safety. Your insurance agent can also help you with your application to make sure you select the right classifications and don’t pay too much by mistake. Leonard Insurance proudly serves businesses in the Mequon, WI, area. Contact us now to learn more.