Your business’ actual workmans comp premium is determined from the yearly workmans comp audit conducted by the insurer. This premium can vary drastically from the estimated premium used to determine the original policy.
To streamline the process, assign one person as the sole contact for the audit. This can avoid miscommunication. Select someone who is closely familiar with all departments and employees, as well as your payroll information.
Have info about the specific job requirements performed by a certain office or by individual employees handy.
Anticipate all inquiries to gain an advantage and ensure that you can supply correct information to your auditor. You don’t want the auditor to make any assumptions because she will always select the workmans comp codes that are far more favorable to the workmans comp insurance carrier.
Ask for the work papers for the previous year’s audit for your contact person to look over with your prior years audit billing statements. This will refresh his or her recollection from the prior audit or show him or her the types of infothings the auditor is trying to find). At any rate, it is a great preparation tool, kind of like studying for a test.
Make sure that your payroll information obviously specify which hours were paid as overtime so that he doesn’t confuse that pay with straight hourly wages. If your company uses subcontractors or independent contractors, ensure you have explanation that they have their own workmans comp insurance. Without that paperwork, your premiums may increase, as you may be responsible for their added risk exposure.
If you employ a staffing agency, those employees are the responsibility of the agency and should be covered by the agency’s workmans comp policy. Make sure your records and make sure to differentiate between employees, contracted temp employees, and independent contractors.
If you’re in the construction industry, or similar, remember that you may use multiple workmans comp class codes and allot one employee multiple job codes. Paperwork must show the particular hours employees spent in each one of the different workplace exposures. If you don’t then, every employee will be put into the most expensive classification code possible.
The key is understanding how the insurers operate. Their goal is to charge you the most they possibly can without losing you as a customer. Another thing you need to remember is that the insurance companies constantly make mistakes and you have to be on the look out for those mistakes.
If you are not fully prepared or you are unfamilar with the workers comp system, talk to a professional or start brushing up on your workmans comp knowledge. It will likely mean the difference between saving and spending a lot of money.
It’s a lot to remember. Look into hiring a private auditing company to help prepare for your annual workmans comp audit.
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