Understanding work comp or even small business insurance in general is not an easy task. We insurance brokers have to learn all sorts of new terminology in order to be able to understand your risks, indemnity, mitigations, and loss. The average small business person can not be expected to understand these terms right off the bat. There is one thing that each and every business owner should know however, and that is workers compensation insurance. Everyone asks me how they can get the lowest rates on their workers compensation insurance. They should know that businesses today have many choices when it comes to choosing their workers compensation insurance carrier and that many might not be the best option for you.
Let us start by understanding exactly what workers comp insurance covers. Workmans compensation insurance is made to offer payment for injury caused in the scope of employment which provides benefits to a worker or the workers dependents for injury, disability, or disease contracted by the worker in the course of his or her employment. For instance if a commercial business owner has a general contracting business that has a employee injure himself while working on a roof, the work comp insurance would pay for medical bills and loss of wages associated with that accident. The process that is needed for your insurance broker to provide you with the best insurance quotes is a relatively quick and mostly painless one. To start your insurance broker might gather some basic info on your business. He or she might ask for your specific operations, number of employees, hourly wage each employee makes along with your business federal tax number that he or she will use for tracking the quotes. Now that he has all of the information needed a quick understanding of the types of workers compensation insurance is required.
Yearly workers comp insurance policy. This is pretty much the most popular type of work comp insurance policy out there. After sending your info to many different carriers, your business insurance agent will get insurance quotes back that will have an estimated premium for the year which has been based on the original information provided. Then payment options are usually offered that include pay in full or having a down payment followed by monthly or some other predetermined payment schedule. These policies are best for companies that have a really good grasp on their normal annual expected payroll and have very small variations from year to year as the end of policy audits can cause large additional premiums that if not planned for, can be extremely costly.
Pay As You Go work comp insurance policies are less likely but a great option for many businesses. Most of the time only requiring a small deposit the business owner then reports to the insurance carrier monthly their actual payroll and then give payment for their premium based on that amount. Contractors like pay as you go policies the construction industry is very unstable at best.
PEO which is a Professional Employers Organization, are a third option that some small businesses prefer. These work comp insurance companies will most of the time only provide insurance to insured that opt to use their integrated payroll servicing services. This pretty much means that you can not do payroll with your own office or third party payroll service which in the end locks you into their services.
Taking the first workers compensation insurance policy that is offered for your particular business is usually not the best choice. Just by taking a moment to ask your insurance agent what other work comp policy options there are for you could save you hundreds or thousands in just deposits alone. Insurance carriers are constantly trying to modify their services in order to offer a wider range of choices to their clients. Know and understand these options so that your workers compensation insurance works for you.
Understanding the different types of Worker Compensation Insurance if very important. Please see our site for additional information on Worker Compensation Insurance