Workers Comp Insurance Companies – Mistakes That Increase Costs
August 13, 2009
If you've ever had employees then you've had to deal with workers comp insurance companies. Dealing with the constant threat of increased rates will make any business owner paranoid.
In all likeliness you already realize that there are things that happen in your business that can cause the workers comp insurance companies to increase your rates. What you may not know is that there are also frequent mistakes made by the insurance company that have a negative effect on your business. The following is a list of common mistakes by employers and workers comp insurance companies.
The following are some common mistakes made by employers that cause work comp rates to go up:
- No safety program for injury prevention
- A lack of an effective return to work plan
- Not reporting injuries to the insurance company in a timely manner
- No direct contact with the injured workers doctor
These are just a few of the common mistakes that employers make when dealing with workers compensation. There are many options available that will help you to reduce your costs with minimal upfront costs. If left unchecked the reasons above can amount to thousands of dollars in increased premiums.
The following list are common mistakes made by workers comp insurance companies:
- Employees given the wrong job classification code
- Employer's experience modification was calculated wrong
- Proper discounts and credits never applied
- Payroll calculation errors
Believe it or not, these problems are just a few of the dozens of mistakes that arise. A common problem is the workers comp insurance company calculating the overtime rate at the amount on the payroll instead of at a straight hourly rate.
Another issue is employees being put into the wrong job class category. This mistake can cost a business thousands of dollars. An example is a clerical worker being classified under the roofing code because that person has to go to the job site on an occasional basis.
If you've ever tried to deal with the insurance companies you know how hard it can be to get your rates lowered. Even though you may be right, you may not know what you need to show in order to fix the problem. Then there's the errors that you don't know about that are costing your business money. Mistakes that amount to tens of thousands of dollars over time.
Trust me, I've seen it. I recently saw a policy that had so many errors that the business ended up being refunded $96,000. Essentially, they received back $16,000 a year for the previous 6 years. I don't know about you but I could sure use an extra $96,000.
You may think I'm making this up but you would be wrong. That's not even the largest refund I've seen. Typically on average we see about $37,000 dollars in refunds. Naturally it all depends on how much you're paying in premiums but typically we usually recover about 10% of the premium amount.
Don't take my word for it, try it out yourself and see.
You can read more about it at: Workers Comp Insurance Company Mistakes
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