Often, small businesses will want to carry workers’ compensation insurance to cover any work-related injuries or illnesses. Therefore, it is important to check the state that your business is in to see the requirement for workers’ compensation.
Unfortunately, workers’ compensation can strain a small business financially. So, here are some ways that workers’ compensation affects your small business and what you can do to lessen the financial burden it can cause.
Cost
Workers’ compensation premiums are the most common cost. The cost of the premium is dependent on your business. Here are the three key factors that influence your premiums:
- Classification code identifies the type of business you own and estimates the cost of your workers’ compensation.
- Experience modification rate (EMR) compares your business to other businesses with a comparable classification code. The score of your EMR is reliant on your claims rate, so the lower number of claims that your business has, the better your score will be.
- Payroll calculates how much your business owes in workers’ compensation premiums by applying your EMR against your payroll.
Those are the most common cost when it comes to workers’ compensation, but other costs are not as easy to identify. One potential issue that can cause your business to lose money is lost work. Depending on what kind of business you own, your EMR can get in the way of your business making money due to there being too many claims in your history that can scare potential clients.
Another potential loss is employee loss. If many accidents and illnesses occur in your business, an employee can believe that your company does not care about the well-being of employees. Potentially, employees will become unhappy, and they will become less productive, or they could even quit.
Reduce Costs through Education
The best way to reduce costs for your small business regarding your workers’ compensation insurance is to generate an environment where your employees are trained and knowledgeable. Well-trained employees will result in fewer injuries in your business. This will mean a lower number of claims, and your business will save money. In addition, training can mean the difference between a small injury or a fatality, so this should be a top priority for a business owner.
Safety training is vital, but you should also know what potential hazards are in the workplace and what causes them. To do this, your business should conduct a risk assessment to determine preventable issues in the workplace.
Reduce Costs Through Managing Claims
Unfortunately, accidents happen, and how you respond to an accident can potentially lower costs in the future. Therefore, it is vital to focus on these three factors to manage your claims.
- Report an injury or accident promptly. When an accident does occur, it should be reported as soon as possible and especially not exceeding 24 hours.
- Investigate an accident to understand what went wrong so you can take appropriate action. A few ways to investigate are to interview anyone involved, document a written investigation report, help to lessen potential workplace hazards, and help to find a way to prevent future accidents.
- Return-to-work programs help employees who were involved in a workplace accident/injury to return to work as quickly as possible. This helps to show that you care about your employees, which makes your employees happier and more likely to return to work quickly.
As a small business owner, workers’ compensation insurance is vital. Some factors cannot lessen the costs of workers’ compensation, but there are many different ways you, as an owner, can prevent potential injuries/accidents in the workplace. Training and educating your employees will help to keep everyone safe and lower your expenses.
About InsureMyWorkComp
InsureMyWorkComp is a digital brokerage that helps clients find the right workers’ compensation solution for their business needs. Unlike other online platforms, we will help you work with an agent who can provide you with the right solution for your risk profile. Our staff has over 50 years of workers’ compensation underwriting and sales experience, and we are confident that we will provide you with the support you need. For more information or to get a quote, contact us today at (855) 340-9138.