Suggestions to avoid major workers compensation mistakes.
As a business owner, periodic audits of your workers compensation insurance are to be expected. However, many business owners are surprised when their audits uncover inconsistencies that raise their rates considerably. Fortunately, there are steps that you can take to avoid major workers compensation mistakes that lead to premium increases. Here are some of the things you should do to ensure auditors do not uncover costly inconsistencies.
- Prevent Code Misclassification
During an audit, many business owners discover that they have been underpaying (or in some cases, overpaying) on their insurance premiums. Generally, employee code misclassification is at the root of this issue. Code classifications play a major role in how a business’s workers compensation insurance premiums are calculated. Unfortunately, with 700 codes to choose from, many business owners struggle to apply the right codes to coincide with their business and their employees’ functions.
- Avoid Inconsistent Payroll Reporting
Workers compensation premiums are also based on a business’s payroll information. However, when a business fails to report payroll information to their insurer, issues can arise. Sometimes inconsistent reporting conceals the hiring or release of employees. When payroll information is inaccurate or not up-to-date, it makes it impossible for insurers to gauge a business’s true risk and adjust its coverage and premiums accordingly. If an auditor discovered payroll inconsistencies, then this can result in major workers compensation insurance rate adjustments.
- Secure Subcontractor Coverage
If a business relies on third-parties to handle certain aspects of their operations, then the business must require these subcontractors to submit proof of workers comp coverage. Failure to secure this proof of insurance can create a major problem for businesses, as they must assume the risk of non-covered subcontractors. Should an auditor discover that a business is failing to collect proof of coverage from its contractors, the business will be forced to pay an increased workers comp rate to address this risk.
Try out these suggestions to avoid major workers compensation mistakes. Do you have further questions regarding your business’s workers compensation coverage? If so, then contact the experts at PMC Insurance Group. We are ready to assist you with all your commercial coverage needs today.