While every state’s workers comp laws are a bit different, there are some fairly common (and costly) workers comp mistakes agents and employers make with workers’ compensation insurance. The good news is that once these are identified, they can be corrected—saving time, money, and maybe even your business.
1. Assuming you have no options (chances are you do)
Only four states (and a few U.S. territories) are ‘monopolistic’ in terms of workers’ compensation options. They include: North Dakota, Ohio, Washington, Wyoming, Puerto Rico, and the U.S. Virgin Islands. These states/territories only allow employers to purchase work-comp from their respective ‘state fund.’
The other 46 states allow companies to compete for your business! That can mean huge savings (and perhaps extra benefits/features) for those employers who explore their options. About half of these non-monopolistic states also offer workers comp through their own state fund. This can confuse employers who don’t understand that the state fund is just one among many options competing for their business.
2. Missing out on cool benefits and features
Insurance companies compete on more than price. Some very cool innovations have developed over the last decade that have helped certain companies really win a lot of workers comp business—and employers are loving it. Let’s review a few:
- Cash-flow friendly billing options (i.e. Pay-As-You-Go)
- Easier payroll reporting (less often, online, or automated)
- Online employer’s portal to help manage it all
- Self-service instant certificate printing/sending
- Free risk management resources
3. Reporting 100% of your payroll (most often this is NOT correct)
It’s very common to have payroll exclusions in a policy; payroll that is not to be reported or factored into premium calculations. Whoever is in charge of reporting payroll to your workers’ compensation company should be extremely clear about this and have the resources necessary to get any clarification needed as questions arise to avoid this potentially costly workers comp mistake.
It’s not a bad idea to audit this occasionally, to make sure you aren’t over-reporting. If you find you have over-reported, it’s a good idea to report this to your insurance company to see if this can be corrected resulting in a credit for your overpayments.
Not every commercial insurance agent is the same. Nav can connect you to the right agent and the right coverage for your business insurance needs. Our partner, Mylo, can help you understand exactly what you need to report so you don’t overpay for your workers’ compensation insurance. Mylo is here to help answer your questions.
4. Paying the medical bills to avoid claims (tempting but…)
It can be tempting to pay an employee’s medical bills for smaller injuries in order to avoid turning in claims, but this is a potential costly workers comp mistake. Know your state’s laws and the implications for you and your workers’ compensation coverage before considering this. It’s almost always a really bad idea for a variety of reasons. It’s illegal in many states. Even if it’s legal, it’s often a move that costs more than just turning in the claim. For example, it can shift the responsibility for future payments from your work-comp company onto you (i.e. that cut turns into gangrene and an amputation turns into a long-term disability).
5. Failing to see how workers comp protects you (it’s got YOUR back)
It’s obvious that the workers’ comp policy benefits the injured employee (they get money quickly without having to sue their employer) but it’s easy to forget that it protects the employer too! How? It contains an ‘exclusive remedy provision’ that limits the employees’ ability to sue the employer for workplace injuries.
In other words, paying work-comp premiums helps you avoid the potentially business-crushing expenses of lawsuits, medical bills, lost wages, disabilities, and more. This is why every employer should probably have a work-comp policy even in the rare circumstance their state may not require them to.
Perhaps getting all of this just right feels like a pain—given all the other demands in your business. If so, we understand!
Nav’s insurance partner, Mylo, has licensed experts all across the country. We can help you make sure you have the insurance you need at the best possible price. They take everything you might like in your local independent agency and make it even better:
- 100+ of the leading companies in the states
- licensed experts in all 50 states
- solid online presence accessible anywhere
- leading-edge tech including instant quotes for some types of policies
- Backed by one of the largest brokerages in the world: Lockton
Disclaimer: Every state is different. Check with an agent/company licensed in your state to determine what your options are—and how to take advantage of them.