Workers Compensation Insurance

What is Workers’ Compensation?
Businesses are required to provide workers’ compensation insurance to their employees. This insurance coverage provides money and medical benefits to an employee who has an injury as a result of an accident, injury or occupational disease on-the-job. Its purpose is to protect workers and their dependents against the hardships from injury or death arising out of the work environment, but it also benefits the employer. The employee accepts workers’ compensation in exchange for forfeiting the right to sue the employer. The employer receives immunity from court actions against them by the employee in exchange for accepting liability that is limited and determined.

Determining Proper Premiums

There are three criteria which determine workers comp premiums:

1. Payroll

2. Employer classification

3. Experience record and number of accidents and severity of injuries.

The payroll element is determined in blocks of $100 of payroll sums.

The second element is how employers are classified. Each classification is designated to pay a certain amount of workers’ compensation premiums per $100 block of payroll. Construction workers, for example, have a high exposure to injuries so they will have a higher experience factor than office personnel who have a low exposure to injuries.

The last element is what is known in the industry as the “experience modification factor” or “experience mod”. In determining the experience mod, the individual employer is compared to other employers within the classification based upon the frequency of accidents and severity of injuries. The more accidents an employer has had in the past, the higher the modification rating.

Reducing Your Workers Compensation Premiums
The reality when it comes to workers’ compensation premiums, is that many employers are paying way too much, due to errors in employer classification and experience mod factors.

Employers should seek the advice of a workers’ compensation expert to help them analyze their experience mod, evaluate classifications and look for ways to reduce costs. When an expert is utilized, many employers will realize significant savings in their workers’ comp costs.

How Knepper Insurance Can Help
Jim Knepper, owner and principal of Knepper Insurance is a Professional Workers Comp Advisor, a designation earned through an extensive program sponsored by the Work Comp Advisory Group.

Jim is experienced in analyzing workers’ comp programs to find ways to reduce costs as well as claims. Through careful reviews of claims history, experience mods and other risk factors, Jim can develop a plan to help you make your business a safer place while saving you money on your workers’ comp insurance.

Contact Jim today at jgk@knepperinsurance.com for a free workers comp review or complete the form below.