ABOUT WORKERS COMPENSATION INSURANCE

Workers' Compensation Insurance provides wage replacement and medical benefits to employees injured in the course of employment in exchange for mandatory relinquishment of the employee's right to sue his or her employer for the tort of negligence.
Workers' Compensation Insurance is a no-fault system, meaning the employee doesn't have to prove the employer is at fault to receive benefits.
Businesses that meet the state requirements must carry workers compensation insurance by law. Learn you State-Specific workers' compensation requirement and regulation on our Locations Page.
State statutes determine how most workers' compensation programs are run. Some States have an Assigned Risk Pool or State Fund for hard-to-place companies, but we can usually offer alternatives to these last-resort options.

Workplace Safety & Workers' Compensation

Implementing workplace safety practices, policies, and procedures can significantly reduce workers' compensation insurance claims and costs. Chief Insurance Solutions LLC is very hands-on with clients who are seeking new and improved ways to improve workplace safety. As a partner with EEAP, we offer full-service workplace safety assistance including a free on-site evaluation, free access to over 650 bilingual safety lessons, free customized safety lessons upon request, free Cal/OSHA Citation Defense, and free unlimited phone consultations with a OSHA Safety Specialist.

EXPLORE WORKPLACE SAFETY

7 Reasons to Shop for Quotes

Saving money, and lots of it!

People often think that the cost of insurance is not very different from one insurance company to another. This misconception enables business owners to overpay for workers compensation insurance without realizing it. In reality, different insurance companies can offer dramatically different rates from one another. For example, class code 8827 for Homemaker Services can be quoted at a rate of 7.5 ($7.5 per $100 of payroll) by one insurance company and 17.5 by another. That is a 57% difference for just one class code! As demonstrated in this example, shopping for quotes can save businesses thousands of dollars.

Feeding the right insurance company

Each insurance company has an appetite or guideline that it follows when bringing in new clients. For example, some insurance companies only like insuring small businesses. Others have restrictions based on operations or dangerous risks. Some insurance companies even prefer working with businesses that have a lot of claims. Insurance companies compare their appetite with your operations, payroll amounts, claims history, and more. Then they generate a quote that reflects how well your business matches those guidelines. The more hungry an insurance company is for your business, the better and cheaper your quotes should be. They can also decline offering coverage if your business is outside of their guidelines. Brokers who understand how insurance company appetites affect prices can help connect you with a compatible insurance company.

Longevity is not a valued trait

People often have a sense of comfort in the loyalty they have with a particular insurance company. While that loyalty is admirable, it is not the best way to secure the lowest workers compensation prices. The cost of premium is not affected by the longevity of your coverage with an insurance company. While it may seem easier to renew with the same company, doing so may limit your opportunities to save money on your premium. By shopping for quotes, you can verify whether is it a good idea to stay with your insurance company or make a switch.

As your business changes, so can your premium

Many changes to you business affect the compatibility and cost of your workers compensation insurance. There may be a significant increase or decrease in payroll or change in the flow of payroll. There may be a severe workers compensation claim or frequent claims. There may even be out of state expansions or a change in operations. All those changes open the door to potential savings with a more compatible insurance company.

Rates are always adjusting

Every year adjustments are made to the premium rates for workers compensation insurance. While sometimes these adjustments are only pennies in difference, they can also be surprisingly steep. When rates adjust, whether higher or lower, insurance companies will also adjust their rates. As a result, an insurance company that quoted the lowest rates for you last year may become much more expensive this year. Likewise, an insurance company that quoted the highest rates for you last year may become much less expensive this year. Shopping can help follow the trends and changes in the workers compensation insurance market.

There is more to it than price

Workers compensation insurance companies and brokerages have more differences than just rates. Insurance companies can offer different payment plans from one anther. For example, businesses with seasonal workers or inconsistent payroll can benefit with payroll reporting plans. Payroll reporting is where you only pay workers compensation insurance to reflect real payroll. Insurance companies can also differ in the amount of deposit they need to set up your policy. If you are hoping to pay less upfront, an insurance company asking for a lower deposit can be a desirable choice. Also, insurance companies have different levels of customer service. For example, internet-savvy businesses may prefer using an online policy holder portal over mailing payments. These advantages and differences make dealing with insurance much less of a hassle. Shopping for quotes helps you learn more about the variations you have to choose from.

There is no obligation to switch

No matter how you choose which quote to move forward with, at the end of the day it is still your choice. Shopping for quotes is an important way to verify that you are not overpaying for your insurance. Once you review your options, you have no obligation to switch insurance companies. This factor makes shopping for quotes harmless, yet very advantageous.

It may seem like a hassle at first, but shopping for insurance quotes can be a painless process. It is especially painless if you work with a brokerage that understands your operations, specializes in workers compensation insurance, and shops with multiple insurance companies each year to secure the lowest possible quotes for you. While sometimes shopping just reaffirms that your current insurance company is the best, other times it can reveal thousands of dollars in savings. Either way, it is a smart and beneficial practice for every business owner.

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Two Types of Workers' Compensation Insurance Claims

The first type of claims are frequent claims. Frequent claims are claims that happen at least a few times a year, but the actual cost of the losses are fairly small. Small, frequent claims seem like less of a bother to the employer, but they are a red flag for insurance companies. This is because they lead the insurance company to believe that nothing is being done to prevent these claims from reoccurring. With the help of a claims analysis from Chief Insurance Solutions, new safety procedures can be implemented to prevent the type of claim from reoccurring and once again put the employer in a favorable position with the insurance companies.

The second type of claims are severe claims. Severe claims, or shock claims, happen infrequently, but they are more serious accidents or injuries and consequently more expensive. Severe claims seem more detrimental to the employer, but are less of a red flag for insurance companies. This is because the insurance company can see them as a fluke that does not necessary reflect inadequacies in the safety procedures or operations of the employer. Chief Insurance Solutions knows how to help underwriters isolate these types of claims when reviewing for quotes. This keeps the employer in a more favorable position to the insurance company when severe claims are present.

Experience Modification Rating

Experience Modification Rating (also referred to as EMR, E-Mod, MOD Rate, Experience Rating, or Experience Modification Rate) is a number used to gauge the cost of injuries in the past and predict chances of risk in the future for an employer. This number is generated and issued by the Rating Bureau for your state. Simply put, the score is calculated by comparing the claims that your company had compared to an average expectancy of claims for companies in your operations. If the EMR is 1.00 that means the company is no more or less risky than average. If the EMR is higher than 1.00 that means the company is riskier than average. If the EMR is lower than 1.00 that means the company is safer than average. This figure is applied as a multiplier when calculating premium, so depending on whether it is over or under 1.00 will result in a premium debit or premium credit. Underwriters will also evaluate the past few years of a companies EMR to see if a positive or negative trend can be identified.

Workers Compensation Insurance Premium Calculation

Workers compensation insurance premium is calculated as follows: Multiply the payroll for each individual class code by the base rates assigned to those class codes. Dividing that by 100, since each rate is per $100 in payroll. Then multiply that by the experience modification.

In the examples below, you can clearly see how nothing affects premium like the experience modification.

Example 1: With No experience modification rating

Payroll for class code 8810: $100,000
Base Rate for class code 8810: 2.00
Experience Modification: 1.00

$100,000 x 2.00 / 100 x 1.00 = $2,000

Example 2: With Debit experience modification rating

Payroll for class code 8810: $100,000
Base Rate for class code 8810: 2.00
Experience Modification: 1.30

$100,000 x 2.00 / 100 x 1.30 = $2,400

Example 3: With Credit experience modification rating

Payroll for class code 8810: $100,000
Base Rate for class code 8810: 2.00
Experience Modification: .88

$100,000 x 2.00 / 100 x .88 = $1,760

The Workers' Compensation Insurance Audit

PAYROLL RECORDS

Payroll journal and summary
Your check book, if the only way you keep records
Federal tax reports (941’s that cover the policy period)
State unemployment reports and individual earnings records
All overtime payments shown individually

EMPLOYEE RECORDS

Detailed explanation of each employee's job duties
Number of employees
Hours, days, or weeks worked annually

description of business operations

What services or products you provide
What clientele you target
The proximity of you work

CERTIFICATES OF INSURANCE

For all subcontractors
For all independent contractors

CASH DISBURSEMENTS

Payments to subcontractors
Cost for materials
Casual labor

Being prepared for your Workers Compensation Audit is not something to think about right before your Audit is scheduled, but something to plan for in advance. The information below is generally requested at the time of your physical Workers Compensation Audit. Having these records well organized throughout the year reduces the hassle of preparing for the Audit and simplifies the process.

Getting Started

Whether you are an established company looking for cost-saving solutions or a start up company setting up your first policy, there are 3 quick and easy ways to secure the lowest workers' compensation insurance quotes on the market with Chief Insurance Solutions LLC.