Eight reasons to review your WC policy annually

While it may be tempting to save time and renew an existing Workers’ Comp policy without an annual review, it’s never a good idea. A lot can happen in a year – businesses are not static and neither are the laws that govern workers comp policies. An annual review helps ensure that you are not overpaying for your coverage or underinsured. Here are eight areas that affect coverage and costs:

1. Changes in your business operations – Even small changes in operations can affect the correct class code. If you’ve changed what you’re doing, how you are doing it, and/or how you deliver the product or service be sure to discuss it with your agent before renewal.
2. Change in ownership, purchase or sale of business, or changes in structure – If you purchased, merged, sold a business or changed the business’s legal structure and did not notify your agent, do so ASAP as this will affect your policy and Experience Mod. Policies specify the time allowed to report any change in ownership to the insurance company and rating organization.
3. Payroll changes – Discuss the reasons for any significant changes in staffing and payroll levels – hiring, terminations – and how they affect classifications as well as new contracts with independent contractors or subcontractors and how they impact risk. Some employers are under the mistaken impression that using pay-as-you-go systems will free them from a workers comp audit. This is simply a different payment option that should provide a more accurate estimate of payroll, not a different type of policy. An audit will still determine if the payroll and class codes are accurate and if contractors and subcontractors had coverage during the audit period.
4. Performing work in another state – Your policy is rated based on the states in which you perform work or have locations. An injury can be very costly if you do not disclose all the states in which you work, even if it is a small percentage of business. Every state has different laws and insurance requirements, so you’ll need to make sure your insurance complies.
5. Experience Mod accuracy – Your experience modification is used in pricing your policy. Errors can occur and the data on the mod should be verified.
6. Remote employees working in different states – A standard workers’ compensation policy covers “primary” states, which are states where your business has locations staffed with employees. If employees are now working from home in different states, it may be necessary to add the state as primary to your workers’ compensation policy or separate workers’ comp policies may need to be purchased.
7. Discounts and credits – Discounts and credits, such as safety programs and drug-free workplaces, vary by state and must be applied for each year. Be sure you are taking advantage of all saving opportunities.
8. The workers’ comp audit – Thirty to sixty days after the renewal of the policy, the workers comp audit is likely to take place. It’s in your best interest to have your agent help prepare for the audit. During the weeks leading up to an audit, the agent can review the payroll records, check for incorrect job classifications, determine all exclusions were properly applied, as well as identify other errors. If they find mistakes, they can correct them before the audit takes place.

Workers’ Compensation is our expertise and we’re here to help provide proper protection, reduce costs, and give you a competitive advantage.