All insurance agents who have spent many years calling on and working with business owners and clients have encountered the negative comments about having to carry workers compensation insurance.
I have always tried to direct this thinking to the positive points regarding workers compensation insurance. In almost all cases where clients dislike having to purchase workers compensation insurance it has to do with the cost, which in many cases can be quite expensive. The factors driving the cost are the amount of payroll, type of work in which the client is engaged, and the past loss history.
Answering the negative side of the workers compensation insurance issue first, the answers are as follows:
Actually, workers compensation insurance has several positive features that should be embraced by business owners such as:
- The type of work involved has a direct effect on premium. The more hazardous the work usually, the higher the premium rate. For example, a painter of a water tower faces a greater chance of a severe injury than an office worker.
- Premium is based on rate times payroll, so the payroll increases, so will the premium. An increase in payroll usually indicates a strong growing company.
- Past injuries or claims will have a direct effect on the rate. Most larger policy holders will have an individual expense modifier which reflects past loss history. Safety activities will help reduce claims and help reduce the individual modifier.
In conclusion, there are far more positive reasons for an employer to carry workers compensation insurance than to be a non-subscriber.
- When a business owner buys a workers compensation insurance policy he becomes a Subscriber to the Workers Compensation Act. When the insurance company issues the policy, they at the same time notify the state and a record of this event is maintained with their file. In the event of a claim being filed at some later date, the State has proof that the business had complied with the Act thereby reliving the business of any liability as a result of a late claim. Workers compensation insurance is the way a business owner can close his books at the end of the year and know that at least from an employee injury standpoint there will be no old claims that can come up later to hurt the business.
- When an employee is injured while working, he will receive no better medical care under any other type of medical coverage than he will under a workers compensation insurance policy.
- The workers compensation insurance policy will also pay a disability payment to the injured worker giving him income to help his family and relieve the employer of the burden of what to do about helping the injured worker support his family.
- Many people who hire other firms to do jobs for them require that whomever they do business with must be covered by workers compensation insurance. By carrying the coverage a business owner helps himself be considered for more work.
Contact us for a workers compensation insurance quote at 512.454.5266.