Tag: Work Comp

Attention: You’re facing a nonrenewal.

Your current insurance policy is being non-renewed due to….

You may have received a notice that starts, sounds or maybe feels something like the title above. Insurance cancellations, despite popular belief are actually more common than you would think. They are very serious and should be responded to with action swiftly, but they are not always an awful “kiss of death” from the insurance industry. Some business owners I have worked with seem to think this is so. On the other side, it is something you need to respond with action to regardless.

 

We will discuss today most common insurance non-renewal or cancellations we see and how you should respond to the scenarios:

 

 …..Your reason for nonrenewal for underwriting reasons

 

What? Are you kidding me? Yes this is by far one of the most vague reasons, but more common than you think and as an insurance agent this tells me basically no reason why you are facing a nonrenewal. Generally this does mean one of two things. Either something about your operations (claims history, etc) or something in particular about your business makes the perceived risk for the insurance carrier less than satisfactory in their review. It could mean the company has changed their underwriting guidelines as a whole, which just happens to mean your company doesn’t fit with their strategy. Simply put insurance companies generally know what their company is good at and what they are not. Some insurance companies prefer to write roofing companies, but wont write clerical offices. many are just the opposite. Most companies fall in the middle which is why this becomes very common.

For Example: Transportation claims have been a leading cause of claims for several years, especially relating to workers’ compensation insurance. As a result in the last few years several insurance carriers who in the past would write these types of accounts have now decided they were no longer offering coverage for companies in your industry or class code. For some insured’s its no surprise when their claims have shown them good reason for this, however some trucking companies who have done well at controlling claims would see non-renewal notices for this type of reason. They were not seeing the non-renewal because of their claims or experience, but more because of the industry as a whole not performing well. This can be discouraging for these types of clients. Clients who take pride in controlling their claims and being very marketable risks to insure. These are the types of clients who need an experienced insurance agency on their side. Preferably one with several market alternatives to move to when this happens.

            What to do?

Discuss with your independent insurance agent what other carrier options are available. Start this process soon so you can make an informed decision on the direction you want to go without being pushed into a last minute decision. Requesting claims history reports and Experience rating worksheets from companies you have been insured with for the last 5 years is a good start as most companies will need this in order to quote.

 

 

Nonrenewal because Agent is no longer representing this insurance carrier…

 

Insurance companies and agencies have contracts come and go fairly often. More often for some agencies than others. This doesn’t mean your agency is not a good agency or that the carrier you are insured with is not a good carrier to do business with. It just means that one or both of those parties have decided they are not the best partnership at this time. This decision has absolutely nothing to do with you as the business owner with the exception that you are part of the pool. Agents within the industry call this the agents “book of business”. Sometimes, for one reason or another, the agency or carrier has decided that the partnership does not fit one o f their needs at this time.

            What to do?

Decide who you like more. If you have not been happy with the agency, call another agency. Especially one who has access to several commercial markets. A lot of times your policy could be moved into another agency book with a just few forms signed.

 

If you like the agency more than you like the carrier, discuss with your agent the alternatives they have to offer so a replacement option can be found well in advance of your renewal date.

 

 

Nonrenewal due to Claims or Non-Renewal Due to payment history issues

 

Don’t be discouraged. We all have set backs and things come up with payments. Insurance claims are the reason we buy insurance. These statements are not to enable you to continue on your path, don’t beat yourself up, but action and change is needed in these situations. Otherwise you are going to see the same situation in the future.

           What to do?

Nonrenewal due to payment issues are a sign that you want to look at things. You might have an accounting back-log or issue that’s delaying your payments (Fix the back log issue and prioritize making payments on time).  You might have cash flow issues from high accounts receivables (manage this aggressively-maybe even consider outsourcing to a collections agency if need is to that extent). Your sales are just low throughout the year or part of the year (work to improve sales or drive down costs more aggressively-most importantly budget for your known operating costs like insurance). These are the most common reasons we see cancellation of insurance. The seriousness of this issue extends into all aspects of your business and is a reason why several studies point to poor accounting practices as a leading reason why many small businesses fail.

 

A Non-Renewal due to claims do happen often. There is really no one answer to how to handle these because the scenarios are always different. Some carriers are more aggressive than others. Some are more reactive while others are more proactive. This is really where having an agent that understands these differences in carriers is vital to helping diagnose the best game plan for your business. For instance, if you had one claim that blew up into a much bigger issue and you have made the necessary corrective actions, most of the time that is not going to be hard to overcome in finding a competitive replacement for coverage.

 

But when you have shown a trend of several claims, either big or small, corrective action must be taken. If these incidents have similar reasoning than from the carriers perspective it may point to poor claims management. If sufficient corrective actions have not been made than the claims are likely to create the same or worse problems for you in the future. These types of issues must be addressed or the problem with claims and obtaining insurance will get worse over time.

 

Overall a nonrenewal of your insurance should not be taken with a grain of salt, but are also not a reason to close your business. The issues are sometimes within your control and many times they are something no one could prevent. The key to is to manage and react promptly. Get past the problem with a well thought out game plan. The help of a good agency is crucial to deal with these problems for your business.

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.

 

 

Seven Insurance Coverages Every Restaurant Should Carry

I am opening a restaurant, what Insurance do I really need? This is a question insurance agents get asked a lot. Not just from restaurant owners, but from all small business owners. The answer to this question is like many things in life; It depends. The answer to this question will be different if you are a Painter, a Dry Cleaner, or even an Artisan Contractor.

 

There are many variables that go in to running a restaurant and those variables bring on completely different risks.

First and foremost the restaurant owner needs to determine what class code their business will be in. To find this out you will need the help of an experienced insurance agent. It is very important to be open and honest with the agent about what your restaurant will and will not be doing. For example, if you are a bar that stays open until 2 AM you will be in a different class code than a diner that is open from 6 AM until 2 PM. The risks are different, so the businesses are classified different. Furthermore, if you are not honest with your agent about serving alcohol they may leave out Liquor Liability Coverage. If an incident occurs without coverage it may be a loss so large it forces you to close permanently.

So once a business is classified correctly there are seven main coverages every restaurant should carry. Some restaurants will need all of these coverages and more. Some restaurants will need only a few coverages. Again, that is where the help of an experienced commercial insurance agent is important. This list is a great starting point for protecting any restaurant.

 

  • General Liability
  • Liquor Liability
  • Commercial Property
  • Hired and Non-owned Auto
  • Commercial Crime
  • Workers’ Compensation
  • Umbrella Policy

 

General Liability

General Liability (GL) is often referred to as the first line of defense in any good business insurance policy. A GL policy protects a business against liability claims for bodily injury and property damage as a result of normal business operations. It also covers some types of advertising liability. This can be as simple as someone slipping and falling on the way to the bathroom to another business claiming you stole their advertising slogan. There are exclusions in every policy and not every carrier has the same exclusions. Reading your policy and consulting with your agent are important.

 

Liquor Liability

Liquor Liability is designed for businesses that sell or serve alcohol. If you do not plan on selling alcohol this is not necessary for your business. In many states, business are required by law to carry this coverage. Liquor liability covers liquor related instances including bodily injury, mental anguish, psychological damage, assault, intoxicated employees and property damage.

 

Commercial Property

Regardless of whether you own or rent the facility your restaurant is located, property insurance is an essential part of protecting your restaurant from disaster. Commercial Property Insurance covers losses and damages to a companies property including buildings and permanent fixtures, inventory, furniture, equipment, personal property, signage, fences, and even landscaping.

 

Hired and Non-Owned Auto

One risk that many restaurant owners forget about is when their employees are using their personal cars for business purposes. This is where Hired and Non-owned Auto Coverage is necessary.  Many restaurant owners think if they do not offer delivery services they do not need Commercial Auto Coverage. That is not always the case. Hired and Non-owned Auto Coverage kicks in when your employees use their own vehicle or a rented vehicle not owned by the the company. The employee could be using their vehicle for something as simple as going to get change at the bank. Regardless of how small the activity may seem, when the employee is using any vehicle to do business activity you are liable.

 

Commercial Crime

In today’s day and age the risk for credit and debit card fraud is very high at a Restaurant. You and your customers are putting a lot of faith in the people you hire to not steal their personal credit card numbers. For this reason it is necessary to carry Commercial Crime Insurance. This coverage provides coverage for criminal acts committed by you or your employees. These can include employee dishonesty, forgery, computer fraud , funds transfer fraud, kidnap, ransom, extortion and money laundering. Depending upon the policy it will pay to defend you at trial and some fines or judgments awarded by a court of law.

 

Workers’ Compensation

 Workers’ Compensation Insurance offers coverage similar to General Liability. Workers Comp is designed for your employees instead of third parties. Work Comp Coverage is frequently referred to as the “exclusive remedy”. This means employees give up some rights to sue for injuries occurring on the job in exchange for guaranteed benefits like lost wages and coverage of medical costs. Employers gain the piece of mind that they will not be sued for most accidents occurring on the job unless the business is intentionally negligent.

 

Umbrella Policy

An Umbrella Insurance Policy is a great way to provide an added layer of protection to your business. The coverage is a policy that goes over the top of other insurance policies for a rainy day. Basically, the Umbrella Policy will provided higher limits of coverage when a large claim occurs. Think about the size of a potential claim if your restaurant caught on fire while people were inside. This could easily lead to you reaching the limits for General Liability and Commercial Property Coverage. This type of situation could easily exceed a typical $1,000,000 occurrence limit for those underlying policies. This is when the Umbrella policy would kick to provide additional coverage over and beyond those limits.

 

In most cases these policies can be bundled together under a Business Owner’s Policy (BOP). Most insurance carriers like to offer policies in a bundle because it brings them more business and allows them to get better prices for the business owner. It also ensures business owner’s are completely covered with no gaps in their coverage. So when you go out looking for your restaurant’s insurance policy these are seven insurance policies to consider when protecting your restaurant.

Workers’ Compensation provider of last resort. 3 ways states provide this service.

Workers’ Compensation Insurance is required coverage for businesses in nearly every state. It covers workers’ for some lost wages and medical costs due to injuries occurring on the job. It provides employers with the piece of mind that they will not be sued for injuries that occur as part of normal business operations. How to administer a system of workers’ compensation is left up to the individual states. Each state has their own way of going about administering this system. One major part of this system is how a state providers employers with a provider of last resort. This is also referred to as the state fund or the assigned risk provider.

Some employers who have had several incidents may be labeled as too much of a risk to insure. other employers are in a very risky industry like off-shore oil-drilling or coal mining. In these situations, insurance companies may deem the business too much of a risk to offer an insurance policy. When this is the case the state steps in and providers a provider of last resort. There are three main ways states go about administering a provider of last resort.

  • A State Fund
  • A Public-Private Partnership
  • Partner with NCCI

A State fund

One way states go about administering a provider of last resort is to have a government provided state fund. Utah and California are examples of two states who have state funded providers. These two states show how a strong or weak assigned risk provider can affect the rates employers pay for coverage. For example, The Workers’ Compensation Fund of Utah (WCF) has a 57 percent market share for work comp policies in the state. The next largest provider owns only a 3 percent share of the market (1). In comparison, The California State Compensation Insurance Fund (CSCIF) controls just over 11 percent of the market, compared to just under 10 percent for the next largest provider. As a result, Utah has workers comp rates that are 107 percent cheaper compared to California. This is not the only contributing factor to the discrepancy in prices, but it goes to show how drastic an effect a strong state fund can have. Now in California’s defense, the Gross Domestic Product (GDP) in Utah is nearly 1.7 trillion dollars less than California (2). That is another huge factor driving up prices in California.

A Public Private partnership.

Some states create a quasi-governmental partnership with a private insurance company to be the provider of last resort. This relationship allows the state and the insurance company partner to spread the risk between the two and still provide coverage to the employers of the state.

Colorado is an example of a strong public private partnership. The state fund provider for Colorado is the company Pinnacol. Pinnacol serves 56,000 businesses covering more than 900,000 workers in Colorado. Colorado employer’s enjoy rates on workers’ compensation insurance that are 19 percent less than the national average(3).

NCCI

Some states partner with an outside organization to administer the state fund. The National Council on Compensation Insurance (NCCI) is the organization most frequently used. NCCI is the nation’s most experienced provider of workers compensation information, tools, and services. In most cases they can administer the assigned risk more efficiently and cheaper than a state government can themselves. States who outsource this job to NCCI typically enjoy lower rates across the board.

Workers’ Compensation, Competitive State Funds

Each state has their own method for how they go about setting up a provider of last resort for workers’ compensation insurance coverage. 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.

Although, I have recently found there are a few state funds that are very competitive.  Some are so competitive my select carriers cannot compete with the rates being offered. I have a hand full of accounts that in the last few months I have tried to move out of the various state funds, but cannot find competitive rates.

Two of the states that I have had a hard time competing in are Texas and Kentucky. Both of these “competitive state funds” are really good at what they do. Offering Workers Compensation with both great rates and great safety resources for their insured’s. The clients I have tried to move out of these state funds are companies that do not fit in the underwriting box of our main street carriers. They still have opportunity to get coverage from a carrier that will offer pay as you go work comp and get out of the state fund. However the day has come when my current clients have said I am perfectly fine staying with the state fund. These carriers are offering dividends in some situations and are also offering an in network option. The in network option offers a network of Doctors that work with the carrier and streamline the process for workers’ compensation claims. This saves money for the employers and lowers the total pay out for a claim.

The state of Colorado also offers a “competitive state fund”. Three years ago I would have said my markets could still compete with these states in the voluntary market. Today I am not so sure. Don’t get me wrong it is still worth going through the process of getting quotes from all options. Depending on what classes of business the funds are doing really well in, you may be able to find better rates in the state fund. Much like the select carriers that are out there, the state fund will write most classes of business, but that does not mean they are going to offer their best pricing. For instance, take a Class Code 9014. This is for a commercial/industrial janitorial business in the state of Texas and this business has a substantial amount of payroll. The industrial cleaning portion of this company is going to kick them out of most of my select carrier underwriting guidelines. That leaves me with my high-risk carriers and my state fund (Texas Mutual). The high-risk carriers are usually going to have higher rates because they are offering to cover a business that not many carriers are willing to take the chance on. The high-risk carriers can only offer a 25% max credit. If the rates are not low enough to begin with we still are not going to be able to save the client money. On top of that we have the in network option and the dividend program. Many customers are benefiting by staying with the state fund of their home state.

The flip side to this is if we take the same Texas Janitorial Company and they decide to expand their operations outside the state of Texas. This would create a completely different scenario. State funds do have the ability to offer “other states” coverage’s on a separate writing paper or policy, but that is usually very limited to states and how much payroll will be allowed. In this case a high-risk carrier would be beneficial. The high-risk carrier will often times have the ability to add additional states to the policy as the company grows. They may also be able to offer better rates than the alternative, which would be having a policy with a handful of separate state fund policies.

Whether I am trying to move an existing client to a more competitive carrier or I have the opportunity to help a client that has come to me in need of a new policy. I have the tools and the ability to take care of the companies insurance needs. That can be through the state fund or through one of our many carriers.

Should I Buy Workers’ Compensation Insurance?

 

This is a question that has been debated often in the Workers’ Compensation Insurance Industry. I think the best way to view this question is to break it down to an understandable level. Most Business owners’ biggest asset and achievement is their company. All of the blood, sweat, stress, and long hours that they have dedicated to this endeavor can be gone in a flash without insurance. A lot of the time it’s the cost of insurance that concerns owners. I never use it or I don’t need it is how business owner’s justify not carrying Workers’ Compensation Insurance Coverage. Why is it that we will insure our cars, home, and life but not our biggest asset? You may have the safest workplace in the world, but something could happen. That something could be just a fluke situation, but wouldn’t you rather have the protection of Insurance vs. the risk of covering out of pocket if something does happen. Below is an example for you to think about related to Workers’ Compensation Insurance:

 

Imagine you own a Law Firm. In your mind  your exposure to workers’ compensation insurance claims is minimal at best. Driving is an exposure that you may not think of that does exist for you and your business. Even though it does not happen very often it does exist. This could be driving to a different law office to pick up papers or meet for a mediation. You could be meeting with a client at their home of out of town. You could just be going down to the courthouse to file paperwork or go to trial. What happens if you or your legal assistance gets in an accident and is hurt. You tend to think that since it was an auto accident it should fall under auto insurance. What you don’t realize is that this employee was doing something in the scope of work and this is viewed as a workers comp incident. What if that employee can’t work anymore and they hire a lawyer. You don’t have work comp coverage so you could be directly responsible for paying claims out of pocket. If you have workers compensation in place, which for a law office is very affordable, then you could file this claim and be covered. You worked many years building your practice so why not protect it instead of leaving all your hard work and client development exposed to changing dramatically or ending completely over an incident that you could have taken care of with insurance.

 

Another quick example is a company that has about 5 employees and only Office exposure. This business doesn’t offer health insurance or work comp. The business owner thinks the business only has office staff. What’s the worse thing that can happen? Well in this scenario, Employee A is getting a glass of water from the dispenser and some water spills onto the floor unnoticed by the employee. Employee B later gets up to go send a fax. On their way Employee B slips and falls straight back and breaks their arm. If there is no insurance in place, the business owner is going to have to pay for this out of pocket. This will take money from the profitability of the company. The Cost of medical care for Employee B was around $20,000. Now if the same Business Owner had Workers’ Compensation Insurance Coverage, that probably based on exposure would have cost around $1,000 for the year, they could have saved $19,000. That is real money that makes a huge difference to business owners of any size.

 

There are many other examples we could go over from contractors to home health care to restaurants. You as a business owner may not think of the risk, but someone in your same business has either felt the pain of not having coverage or the relief of knowing that insurance is protecting what they have spent years building. Don’t leave your most treasured asset exposed. Consider the long-term benefits of insurance. It’s not a matter of if it will happen. It’s a matter of when it will happen.

Floridas Workers Comp Exemption Process in 20 Steps

The process for an owner of a company to get themselves properly excluded from a workers compensation insurance policy in Florida is quite cumbersome. In fact, owners not becoming properly excluded is one of the leading causes of workers’ compensation audit balances in the state of Florida. In Florida, an officer or LLC Member can only be excluded if they have a properly filed a Florida workers comp exemption form on file with the state. This can be done in two ways: 1) Complete a form by hand, get a notary signature, and mail the form to the proper Division of Workers Compensation office; or 2) Complete the online version of the form.

Florida workers comp exemption

The handwritten option is not overly reliable. Any errors on the form or if it is sent to the wrong office can cause the form to not be filed. In this circumstance the owner ends up getting included on the policy and will owe additional premium.  The online form is the best solution, even though the process is cumbersome and detailed. That’s why I’ve created this 20-step process for an insured to follow to make sure the officers are properly excluded.

Florida Workers Comp Exemption

1. Go to Sunbiz.org

2. Use the Document Searches Tab to find your Corporation or LLC. It is best to use the Tax ID

3. Make sure the business is in Active status. If not, correct this with the secretary of state before filing your exemption.

4. Your information inputted for your exemption must match Sunbiz. Therefore it is important to have this information handy.

5. For online filing use the link below. Otherwise use the paper form (input form number)

https//apps.fldfs.com/bocexempt/

6. Click the Apply for or Renew an Exemption button

7. Agree to Terms and Use a Pin to access in the future.

8. Section 1:

a. Applicant Name – Name of the person who is being excluded

b. Drivers License Number – select the correct state

c. Last 4 of Social

d. E-mail address – this is not required but helpful

9. Section 2:

a. Select Construction or Non-Construction

b. Select Either an Officer or Member of LLC

10. Section 3: Important to have your Sunbiz paperwork for this

a. Enter all information as listed on Sunbiz. Do Not Mis-Spell

b. Select a Scope of Business from the drop down menu. This is your main workers compensation class code with a 0 in front of the 4 digit code.

11. Section 4:

a. Input the document number listed on Sunbiz

12. Section 5

a. Either complete or check mark the “not applicable” box.

13. Section 7

a. Input other company info the applicant is an officer for

– This does NOT mean that the exemption is registered for each entity. You MUST enter the exemption information for EACH entity the owner is connected with. A separate application is required for each Tax Id.

14. Section 8

a. Verify this is correct

15. Section 9 –

a. Input workers compensation carrier name

16. Section 10

a. Input Name & Drivers License

17. Hit Continue

18. Hit Submit – there is a submit button after you hit continue

19. Processing Time – It generally takes 3-5 business days to process. Check back on the Florida Proof of Coverage website until it shows as registered.

20. If the Application is Rejected – Use the register website above, Click “Modify Application”, input your Pin and correct the problem. Best to contact the Florida Division of Workers Compensation and ask why the application was rejected so you know what to correct. 850-413-1609 option 2

Notes

Most exemptions are only active for 2 years. The exemption must be renewed by re-entering the information online.

Construction exemptions require a payment of $50

It’s very important to check back on the status of the exemption. Several times when registering for exemptions my clients have not received communication and the application didn’t process.

Spelling everything exactly like listed on Sunbiz is VERY IMPORTANT

Are you paying too much for Workers Comp or too much for Payroll? Maybe Both

 

Have you ever purchased a used car or found a great deal on a piece of used furniture at a “sale”?  Than got home to find out it was not the steal you thought when writing the check. Buying commercial insurance can sometimes be this way. It can be a stressful and time-consuming process, especially if you do not have an experienced insurance agent on your side. A good insurance agent can help you find things you might be overpaying for, or maybe some parts of your insurance policy are not set up right at all.

 

For example, I recently worked with a client who’s business is in a high risk agriculture industry. They pay a significant amount on their workers’ compensation insurance each year. This business was part of an alternate service organization, which provided payroll services. It than reports the payroll to their workers’ compensation carrier for the companies Pay-as-You-Go reporting. This was two separate companies doing these processes.

 

In the case of this business we found the workers’ compensation rates were a little high. So to help this business we found a carrier who could save them money on their workers comp coverage. We also found their payroll reporting charges were very high. In this business there are lots of companies that provide work comp and Payroll services. both services. Most of these agencies can offer a better rate because they are getting both businesses. Some try to charge lower workers comp rates, but make up the difference by charging more for the payroll processing side of things or vice versa.  Sometimes it is just that a payroll company knows they can build in a little extra that ends up costing you a lot!

 

For this business we were able to find an aggressive workers’ compensation carrier that provided competitive workers comp rates.  This carrier also integrated their payroll services and collected on a Pay-As-You-GO billing plan. By combining the two services, we were able to save this client nearly $25,000 per year on their work comp premiums and $23,000 per year on their payroll processing. Part of this savings was based on the payroll being reported by a company different than the insurance carrier. This disconnect can cause inaccurate reporting. Many companies work with agencies who actually operate the payroll service in house. They do this with the insurance carrier operations to make this fully integrated. This process also helps prevent fraud by acting as an extra verification procedure.

 

There are a lot of solutions out there for getting coverage in place.  If you can get workers compensation in place on a hard to write class code and get it on a pay-as-you-go basis, it seems like a dream come true.  However, this is an example of how just looking at the down payment or the workers comp rates alone can end up costing your company significantly. It’s always best to review the rates you are paying for this type of plan.  Review what is being charged for all the services provided. Sometimes this is where another company is really making their margin at your expense.

What is Pay as You Go Workers’ Compensation?

Pay as You Go Workers’ Compensation Insurance is a fairly new program that is designed to help business owner’s free up cash so they can pay their insurance premium’s monthly instead of in one lump sum. Pay as You Go Workers’ Compensation benefits employers in three main ways:

  1. Pay as You Go Workers Compensation Insurance allows businesses to pay their premium monthly instead of in one large payment.
  2. Pay as You Go frees up cash flow for more immediate business needs.
  3. Pay as You Go prevents audits because both payroll and premiums are calculated monthly instead of yearly.

My Insurance Question can help you pick out the best Pay as You Go Workers' Compensation Insurance Policy.

Pay as You Go Workers’ Compensation Insurance Coverage benefits businesses by allowing them to pay their insurance premium’s monthly based on the payroll of their workforce that month only. This is a great option for industries like construction, farming or landscaping. These industries sometimes have a hard time forecasting payroll because of the weather and many other factors. If your business deals with these types of issues than Pay Go may be a great option for you and your business.

 

Another benefit of Pay as You Go Workers’ Compensation Insurance is that it frees up cash flow for more immediate business needs. With a traditional Workers Comp policy typically twenty five percent of the premium is due all at once. The rest is usually paid in nine monthly payments. This means the business is spending money on insurance immediately that could be used on other more urgent business needs.

Pay as You Go Workers' Compensation Insurance

Finally, business owner’s benefit from Pay Go Workers’ Compensation Coverage because it prevents audits from happening more frequently. An end of term audit still happens, but Pay Go prevents audits from happening more frequently and makes the difference owed much smaller. With the monthly payment format there is less risk of over or underpaying the premium.

Janitorial Business, Liability Needs.

One of the first accounts I ever quoted was for a janitorial cleaning company. This company really stuck out to me. The client called me bright and early one morning looking for a workers compensation quote. It was a commercial cleaning company and when I started the quoting process, I realized there was much more to this risk than I actually thought. I noticed commercial janitorial cleaning was actually a very popular risk to insure, but sadly not many people know how to do it. It is not a difficult risk to write, but some might find all the questions to be rather nerve racking. So allow me to help you out!

If you are thinking about getting workers compensation for your own janitorial cleaning company, you need to first ask yourself these fundamental questions.

1) Will you be doing residential or commercial janitorial cleaning?
* There is a huge difference between commercial cleaning and residential. Commercial consist of any legal business, office, or sometimes contracted apartment cleaning (if the resident has moved out and you are cleaning it for the next resident.) Residential cleaning is basically any home that is occupied by residents.

2) What will you be cleaning?
* It is very important to tell your insurance agent exactly what you will be doing. For example: We will need to know if you are leaning window or gutters.  If so, we will need to know how you get to the gutters. What will be the maximum height you will go to, to do the cleaning? If you are moving furniture around.

3) How many employees will be on location?
* Since workers compensation is based off the employees’ payroll, it will be beneficial to tell your agent how many employees you will have at each location.

4) What chemicals will you be using?
* If you are using any type of harsh chemicals to clean with, then you should explain to the agent what the chemicals are and how you will be handling them.

5) What will be the travel exposure between job locations?
* This is a very important question. Your agent will need to know the estimated miles between job locations.

6) What safety program do you have in place?
* This is something you should always have no matter the job. It is critical you have a safety program in place.

These are some of the questions I always ask my clients. It is very critical to know exactly what the janitorial company does.

Now like all other workers compensation quotes, the agent will need to know employee count and payroll for each employee. If you have employees doing jobs other than janitorial cleaning, then you need to explain what those employees will be doing. After you have answered all those questions, then you will be ready to get started on the workers compensation quote.

Now I also want to share a piece of knowledge I learned while quoting janitorial companies. If you are seeking General Liability for your business, then here is a good piece of information that you want to ask your agent. A lot of janitorial businesses are trusted with a key to get into the building. Now if you have a lot of contracts with different locations, then you probably have several keys. Here is the gem I told you about, you need to ask your agent for ‘Lost Key Coverage.” Lost Key Coverage will be an endorsement added to your general liability policy that will pay to replace all the keys you have lost or were stolen. Having the locks replaced for 25 different businesses is very expensive. So if I were you, I would make sure that my general liability policy has lost key coverage or something very similar to it.

**There are also Janitorial Surety Bonds. These bonds will protects the insured’s clients, if one of your employees were to steal from the client. The employee must be convicted before any coverage will be applied.