Contractors with workers comp insurance get much more than peace of mind in knowing an injured employee will receive the medical care and financial assistance needed to recover. When trying to win a bid, many companies will immediately overlook a contractor without this coverage.
While contractors need this important insurance, it does come with costs, making it crucial to find ways to save on workers’ compensation renewals. This article explores the basics of this type of insurance, various ways to save, and the benefits of working with an insurance specialist.
Understanding Workers’ Compensation Premiums
Workers comp insurance covers medical care costs and lost wages for an employee with a work-related injury and illness. Additionally, many policies also come with liability insurance for the employer, which helps protect a business from a potential lawsuit.
When it comes to premium costs, the final calculation factors in the type of work done, claims history, employee classifications, total payroll, number of employees, and more. Part of premium calculations include the industry classification codes determined by rating bureaus like the National Council on Compensation Insurance (NCCI). Furthermore, the codes used to calculate workers’ comp premiums are based on the riskiest activity an employee performs, not the activity the employee performs most frequently.
Best Practices to Save Money on Workers’ Compensation Renewals
Well before a workers’ comp policy renewal, contractors should start thinking about ways to reduce costs. By working with an experienced insurance professional with workers comp expertise, contractors may uncover ways to save on premiums and implement effective risk management solutions. This proactive step not only can help reduce premiums but also minimize claims.
An essential component of saving on workers comp insurance is classifying employees correctly according to their risk exposure.
In addition, contractors may minimize costs by implementing strategies that reduce the number and cost of claims. Some best practices to incorporate include establishing a return-to-work program, supporting a substance-free workplace, and having a comprehensive and documented safety program, which California requires.
Unfortunately, even with the above steps in place, an accident can still happen. If one does, it’s important to adhere to workers comp insurance claim guidelines. Filing quickly and with the proper documentation helps enhance claims management and lets insurance companies know that a business takes incidents seriously.
State-Specific Considerations for Contractors in California
In July 2023, a new law took effect that requires nearly all California contractors to have workers’ compensation insurance even if they don’t have employees. The initial group of contractors includes licensed concrete, HVAC, asbestos abatement, and tree service contractors. It will include all licensed contractors with an employee by 2026.
Because many contractors are new to workers comp insurance in California, it’s important to work with an agent specializing in insurance for contractors. An experienced agent understands the nuances of workers’ comp insurance and will work with contractors to ensure they get the unique and tailored insurance they need at the lowest cost possible.
Conclusion
Whether renewing a policy or initially setting up workers comp insurance, employers must explore ways to contain costs for continued success. Contractors have different options to reduce costs, from establishing safety procedures to planning ahead for renewal and working with specialized insurance agents. To learn more and explore ways to save on workers’ comp insurance renewals, reach out to us at Western Republic.
About Western Republic
A local owner and operator since 2009, Gabe Stubin of Western Republic Insurance Services has delivered quality insurance solutions to individuals in Huntington Beach, California, for over 17 years. Specializing in Commercial Business insurance coverage, our team of knowledgeable insurance professionals is committed to helping you find a policy that fits your needs. We focus on providing individualized attention and quality customer service to create an experience that’s difficult to find in today’s market. At Western Republic Insurance Services, we’ll work with you to ensure that you and those you care about most are protected.