If you own a small business and have at least one employee besides yourself, by law you have to carry workers compensation insurance. The going average cost in the private sector right now is around $2.30 for every hour worked, times the number of employees.[1] In today's tough business environment, saving every penny and avoiding unnecessary costs can determine whether or not the doors stay open. Here are some tips to save money on your workers compensation insurance.
Get group rating
Just as with healthcare insurance, group rates on workers comp can mean huge discounts for your business. Even if you don't have a large number of employees you may still be able to take advantage by belonging to an industry or trade association that has at least 300 members and two or more businesses with risks substantially similar to yours.[2]
Ask your insurance carrier for help
Invite your agent or a company representative to visit your workplace and identify potential hazards. Then document that you've remedied the problems. Welcome annual reviews.
Have a documented safety program
Some states including California require that you have a written safety program. Even if your state doesn't, it's still a smart idea since studies have shown that for every dollar invested in preventing workplace injuries can result in a $2 to $6 ROI. [3] A solid safety program also demonstrates to insurance carriers that you take this stuff seriously. Insurers will be more impressed if you give your program more than lip service by documenting regular on-the-job-safety training/updates for staff. You should also require that employees sign off that they've read and received your program material.
Have a return-to-work program
Accidents will happen even in the safest work in environment. When they do, a return-to-work program can help you contain costs. The longer a claim stays open, the more it costs your insurance company--costs that are ultimately passed on to you. The goal is to close any workers comp claim as quickly as possible by getting the injured work back on the job, even if it's part-time or reduced duties approved by the employee's medical provider.
Support a substance-free workplace
Employees who use drugs or alcohol on the job cause injuries to themselves and others. They also cost their employers about twice as much in workers comp and medical claims as non-abusers, according to data from the Substance Abuse and Mental Health Services Administration. At bare minimum, make hiring contingent on passing a pre-employment drug test. You may also want to consider random testing for all employees.
Make sure you have the proper job classifications
Write complete, accurate job descriptions for each employee and make sure nobody steps outside his or her responsibilities. A receptionist who injures herself lifting heavy boxes could hurt you when she files a claim. Also know that workers may be classified as independent contractors for tax purposes but still be considered employees by your state's regulators.
Educate your employees about the difference between minor injuries and reportable incidents
Avoid unnecessary reporting that can create adverse loss ratios on your workers comp record. Small injuries likes minor cuts or scrapes that can be treated with on-the-job first aid, an office visit and a follow-up for observation should not be reported.
Shop and compare
Get the best possible workers compensation package by comparing policies. You can do that easily online.
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