How to Avoid Having Your Workers’ Comp Costs Increase
- Published Jul 08, 2022
As a business owner, managing your costs and expenses is a key part of being successful. There are certain aspects of your business where costs cannot be managed, but there are others where a bit of maneuvering can help optimize your business’s budget. Insurance premiums are tricky because they are based on a variety of factors unique to your business and change often. However, before it comes time to renew your policy, there are steps you can take to try to keep your workers’ comp insurance costs from increasing.
Workers’ comp rates and claims do affect the bottom line of your business, so having a plan in place to minimize workers’ compensation rate increases can help avoid surprise premiums. Let’s dive into the factors that affect your workers’ comp rates and the steps you can take to try and prevent premium increases.
Factors that Impact a Workers’ Comp Insurance Increase
There are several important factors that affect how much your workers’ compensation rate, or premium, will cost.
First and foremost is your workers’ comp claims history. The more claims your business has filed, the higher the chance that your workers’ comp rates will increase upon your renewal or purchase of a new policy. In addition, the expense those claims ultimately cost your insurer may further impact your rate. So this means if your business has a history of serious injuries or illnesses then your premiums will likely be higher than that of a business whose claims history features less serious injuries.
Another factor that affects your workers’ compensation rate is how your business is classified by insurers. Essentially, this means if your business has changed industries, added services, or changed job responsibilities and is now considered a riskier classification, your workers’ compensation rate may increase.
Lastly, how much your business spends on payroll is another reason your workers’ comp rates may go up. The more employees you have, the greater the chance your business will experience an incident requiring a workers’ comp claim. So, insurers take your overall payroll into account when determining your premium cost.
How To Prevent Workers’ Comp Rate Increases
Although you can’t prevent workplace accidents 100%, there are steps you can take to help prevent workplace injuries before they happen and, as a result, potentially lower your workers’ comp rates. These steps include:
- Setting up a safety program. By establishing a workplace culture that puts safety first, you can help prevent workplace injuries. Safety programs should help outline best practices, establish workplace policies regarding safe working procedures, and show employees that you’re committed to creating a safe workplace.
- Establish a procedure for bringing injured employees back to work quickly. No workplace can completely eliminate injuries, but how you handle them when they do occur can affect your workers’ comp rates. When an employee is injured, having a return-to-work program that helps them get healthy and back to work quickly, even if on a modified responsibility basis, can help your workers’ comp rates.
- Regularly assess your business’s industry, payroll, location, and more. Being an inactive part of your workers’ comp management can lead to misclassifications by your insurer and higher workers’ comp costs. It’s good to evaluate your business’s specifics regularly to make sure you’re being classified correctly across the various factors that insurers use to determine quotes.
Cerity Can Help
Whether you’re looking for a new insurer or are getting workers’ comp coverage for the first time, it’s good to have someone on your side who knows how to optimize your workers’ comp costs. Cerity is here to help business owners just like you maximize their workers’ comp. We work hard to understand workers’ comp so you can focus on what you do best — running your business.
With Cerity, we created a faster, more affordable approach to workers’ compensation. Simply go to our free online quote tool to get your quote without phone calls or paperwork. Tell us a little bit about your business to get an affordable rate, and you can buy a policy online in minutes to cover you for the year ahead.