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Tips for First-Time Buyers

As a trusted advisor to your client, here are few quick tips to think about before buying your first policy that will save you time and money later:

• Know where your insureds employees will work. Workers’ compensation is regulated on a state-by-state basis and depends on where the employees perform work not necessarily where the business was founded or is based. Who needs to be covered, where to buy a policy and how much it will cost are all mandated or influenced by state law. Fastcomp is licensed in 46 states and can help.
• Make sure your insureds policy is comprehensive. If you’re insured is going to have employees in multiple states, or employees traveling across state lines to work, make sure the policy covers these states as well.
• Have your insured decide how many employees they plan to hire, and how much they plan to pay them. Workers’ compensation premiums are calculated, in part, by the kinds of work performed. Many businesses have multiple functions performed by different kinds of employees – right now your insured may just have a few people who wear many different hats. It’s important to classify employees accurately – based on what they spend the majority of their time doing – because this could alter your insureds premium dramatically.
• Don’t under estimate your insureds payroll. Insuring your clients business for less than its true payroll can be a costly mistake. Annual workers’ compensation audits could result in an unexpected cost that cripples your insureds cash flow, or worse suffer a claim and not have sufficient coverage.
• Insured should maintain a safe workplace, by posting the required work comp posters and establish formal safety programs and first-aid procedures, which reduce the possibility of claims and can make your insured eligible for lower premiums.

Control Your Costs

Suffering a claim or getting fined for not having coverage could be far more devastating to your insured than limited cash flow. Fortunately, you can factor the annual expense of a work comp policy into your budget, and there are steps you can take to lower your costs over time.

Prevent Claims

• Your insureds claims history is used to gauge how safe your insureds workplace is and how likely they are to have future claims. Any claim, big or small, will influence your insureds premium. Conversely, months or years without a claim reflects a safe work environment and can lower your insureds rates.
• The most significant way to control your insureds work comp costs is to prevent accidents from happening and to promote safety in your insureds workplace.
• Knowing your insureds level of risk can help prevent workplace accidents. Learn more about the most common injuries in your insureds industry and build employee training around those hazards. Make sure your insured post the required work comp posters and establish formal safety programs. First-aid procedures which, in addition to reducing the possibility of claims, can make your insured eligible for a safety credit.

Revise Class Code & Payroll Annually

• Insurance carriers calculate work comp premiums, in part, by evaluating the kinds of work a business performs. Make sure you use the correct class code for the governing class code
• As your insureds business grows, it’s important to evaluate the class codes and payroll on the exisiting policy. Check at least annually to make sure your insureds policy accurately reflects their business.

Don’t Cut Corners

• One of the most common mistakes made by small businesses is to cancel coverage when it’s not needed (such as contractors when between jobs). But what saves money in the short-term may be more costly long-term: Insurance carriers review the past history of applicants and will deny coverage or charge higher premiums when they see inconsistent coverage.
• Don’t under estimate your insureds payroll. Insuring your clients business for less than its true payroll can be a costly mistake. Annual workers’ compensation audits could result in an unexpected cost that cripples your insureds cash flow, or worse suffer a claim and not have sufficient coverage.

Experience Mod

• If you’re insured has been in business for three years or more, they may be assigned an experience mod. The rating bureau in your state rates your clients business based on its history of claims the past three years. The experience mod is baselined at 1.0.
• Businesses with few or no claims during this timeframe will receive lower experience mods (less than 1.0). Insurance carriers are required by law to credit your insureds premium based on the experience mod, resulting in big savings over time.

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