WC is not just for compliance
As an employer, you know that a workers’ compensation policy is a necessity to comply with the law. Severe penalties—$2,000 for every 10 days—can accrue if your business is found to be unlawfully uninsured. However, the benefits of being insured do not stop with compliance.
A prime benefit is the welfare of your valuable employees. Next comes the predictability of premiums vs. the vulnerability of prohibitive medical expenses. And, because the state workers’ compensation law makes the employer’s (i.e., the insurer’s) payment of benefits the exclusive remedy for an injured employee, the employee is barred from suing the employer who is negligent in causing the injury.
An employer can benefit from the rating of the workers’ compensation policy because it includes what is called an “experience modification factor.” A classification rate is an average rate for all employers who hire employees to perform the same type of work (e.g., office work). The Experience Rating Plan adjusts the average rate (up or down) going forward using actual experience from a particular employer’s past. The average rate is now adjusted to better fit the individual employer’s risk level. A factor of 1.0 would indicate the employer has average experience. A factor above 1.0 indicates the employer has worse-than-average experience and a factor below 1.0 indicates the experience is better than average. This gives an employer an opportunity to see how one’s own record of injuries compares to others in the industry. Armed with this information, the employer can move toward a safer workplace.
If you have questions about the benefits of workers’ compensation, give our agency a call.