Top Tips to Recession-Proof Your Business

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Over the past several months, most business owners, and individuals alike, have heard mutterings about a recession.

Although we in no way can predict what’s coming, at Competitive Edge Insurance, we thought it’d be helpful to provide business owners with the top three tips they can take to recession-proof their businesses.

Let’s dive in; first, with an overview of what’s going on.

What Is Going On?

Many Americans might already be feeling the heat with decades-high inflation, record gas prices, and hefty grocery bills.

​​Bloomberg Economics says there’s close to a 75% probability there will be a recession by the start of 2024.

But how did this happen? And what is a recession?

What Is a Recession?

A recession, as defined by the National Bureau of Economic Research (NBER), is a “significant decline in economic activity that is spread across the economy and that lasts more than a few months.”

This period of time is when the economy contracts and business activity slows down. This can be caused by a number of factors, including a:

  • decrease in consumer spending
  • increase in taxes
  • decrease in government spending 
  • natural disaster

Businesses typically suffer during a recession, as there is less money circulating and people are more likely to save rather than spend. This can lead to layoffs, closures, and decreased profits.

As a business owner, it is important to recession-proof your business as much as possible. This means taking steps to ensure that your business can weather a recession and still remain profitable.

Contributing Factors

There are many contributing factors that have led the U.S. economy to tip its way toward a recession—inflation, supply chain issues, a nationwide labor shortage, the list goes on.

Moreover, The Washington Post notes that the Federal Reserve’s efforts to temper demand and tame prices have also been a contributing factor.

Oracle writes that “since 1950, recessions have lasted between two and 18 months.” This period can be “stressful for business owners, since they don’t know how long it will last. A business can freefall without an end in sight — if it isn’t ready.”

So let us help you prepare.

How Can You Recession-Proof Your Business?

There are many things you can do to recession-proof your business. For example, business owners can create a business emergency fund, assess their risk tolerance, reduce overhead, and more.

Minimize Workers’ Compensation Claims

One thing you don’t want in the midst of, or prior to a recession, is workers’ compensation claims being filed against your business. Why? It’s expensive.

Employers face both direct and indirect costs when a workers’ comp claim is filed.

Most obviously, when an employee is out on workers’ compensation, a business owner essentially “loses” their work. You then have to pay for another employee to pick up the slack (overtime in some cases), which can be costly.

Additionally, workers’ compensation claims can:

  • Increase your insurance premiums
  • Damage your public reputation, and
  • In some cases, a business can be penalized up to $136,532 per person by the Occupational Safety and Health Administration (OSHA) for repeated or willful violations

(Yikes, that’s a lot of money!)

This considered, it’s crucial (especially during this time of teetering toward a recession) to do everything you can to make your workplace safe, and therefore, reduce workers’ compensation claims.

Interested in learning how workers’ compensation plays out for remote workers? Read our article “What Does Workers’ Comp Look Like for Remote Employees?”

Create Trust and Safety Among Employees

Significant layoffs can already be observed across the nation. This considered, a recession can be an especially scary time for your employees.

During this time, as a business owner, it’s especially important to create trust and safety among your employees. Consider doing the following to build employee retention:

  • Keeping an open, honest line of communication
  • Listening to your employees
  • Utilizing employee engagement data
  • Offering consistent and effective feedback
  • Recognizing a job well done
  • Not letting team building fall to the wayside
  • Encouraging health and wellness and work-life balance

Invest in Insurance

The last thing you want during a recession is to get hit without the proper insurance. Typically, business profit is already top-of-mind during a recession.

If a cyber attack occurs, you receive high levels of workers’ comp claims, or an injury takes place on your commercial property, you want to be sure that you have the right insurance in place to keep your business financially protected.

Without proper insurance, a business owner may have to pay out-of-pocket for costly damages and legal claims against their company.

Additional Steps to Help

Minimizing workers’ comp claims, creating trust and safety among employees and investing in insurance are our top three tips, but there are so many other steps that you can take to help your business during a recession, such as: 

1. Diversify your revenue streams

Don’t rely on just one source of income. If possible, try to have multiple, different streams of revenue coming in. That way, if one or two of them dry up, you’ll still have money coming in from the others.

2. Cut costs where you can

During a recession, every penny counts. Take a close look at your budget and see where you can cut costs. Even small savings can add up over time and make a big difference.

3. Build up your cash reserves

Having a healthy cash reserve is always a good idea, but it’s especially important during a recession. This will help you weather any tough times and keep your business afloat.

4. Focus on customer retention

During a recession, it’s more important than ever to hang onto your existing customers. Keep them happy and they’ll stick with you, even when times are tough.

5. Invest in marketing

Marketing is vital for any business, but it’s especially important during a recession. Why? Because that’s when people are scaling back their spending and being more particular about where they spend their money. If you want to stay top of mind, you need to keep marketing.

Keep Your Eye On the Prize

It’s easy to get discouraged during a recession, but it’s important to remember why you’re in business in the first place. Stay focused on your goals and don’t let tough times get in the way of your long-term success.

As a business owner, recession-proofing your company is vital to ensuring that success.

Interested in learning more about how to keep your business safe? Read on to find out what types of insurance your business needs during a recession.

How Do You Reduce Experience Modification?

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If there’s one thing a business owner doesn’t want, it’s paying high workers’ compensation insurance premiums. One way to decrease the workers’ comp premiums that you pay, however, is by reducing your experience modification.

Below, we’ll chat about experience modification: What is it? Why should you care about your rating as a business owner? And what can you do to reduce experience modification, and therefore, worker’s compensation costs?

Let’s dive in.

WHAT IS EXPERIENCE MODIFICATION?

First things first, what is experience modification? Experience modification, according to The Workers’ Compensation Insurance Rating Bureau of California (WCIRB), is calculated by comparing a business’s actual losses to its expected losses.

Actual losses include “medical and indemnity claim costs resulting from a work-related injury that an insurance company has paid or expects to pay in the future.” Expected losses represent the amount of loss an insured party experiences compared to the amount of loss similar insured parties have.

Experience modification might also be referred to as a workers’ comp experience mod, an EMR safety rating (EMR stands for experience modification rate), or Ex Mod.

WHAT IS AN EXPERIENCE MODIFICATION RATE?

An experience modification rate (EMR) is assigned to every business that purchases worker’s compensation insurance. The EMR is a number that reflects the company’s past losses due to worker injuries. It is used by insurers to help predict future worker injury claims and to set premiums for worker’s compensation insurance.

There are various elements that can affect a business’ EMR. These can include:

  • The type of business
  • The number of employees
  • The industry, and
  • The state in which the business is located

Businesses with a high number of worker’s compensation claims will typically have a higher EMR.

FORMULA FOR CALCULATING EXPERIENCE MODIFICATION

Experience Modification = Actual Losses / Expected Losses

These losses involve several factors, including:

  • The number of worker injury claims filed
  • The cost of those worker injury claims, and
  • The amount of time that has passed since the last worker injury claim was filed

EMR’s are based on information from your insurance claims history, reported to the National Council on Compensation Insurance (NCCI), over the past five years. However, only claims from the past three years will be assessed by insurance agencies.

If you’re a newer business that has less than three years of claims history, your EMR is typically calculated at a base rate of one.

WHY SHOULD I CARE ABOUT EXPERIENCE MODIFICATION?

A business’s experience modification rate represents, numerically, how safe your business is compared to others in your industry.

Insurance companies use your ex mod to evaluate and measure the amount of risk they are taking on by having you as a client. A higher ex mod means paying higher workers’ compensation insurance premiums.

Standard ratings begin at one; one means your business is as safe as the average. For businesses who have had safety incidents, however, they’ll likely receive a number higher than one—perhaps a 1.2 depending on the accident or number of accidents. As for small businesses with spotless records, they might even score lower than one.

This considered, you might be asking yourself: How does my business fare? What is the highest experience modification rate possible? Workers’ Compensation Consultants tell us that any ex mod over 1.0 could be considered high if you’re comparing your business to its industry average.

In fact, “if you are comparing to the best performers within your industry, who may have very low mods, a 1.00 could be considered high.”

WHAT IS CONSIDERED A GOOD OR BAD EMR?

As a business owner, you’re always looking for ways to save money. Worker’s compensation insurance is one of those necessary evils that can eat up a lot of your budget if you’re not careful. One way to keep your worker’s compensation costs down is to maintain a good experience modification rate.

EMRs can commonly range between 0.48 to 1.25 or higher. The lower the rating, the better. A high rating, above a 1.0, is considered a bad EMR and will increase your worker’s comp premiums. 

Again, worker’s compensation insurance rates are based on your company’s claims history. The more claims you have, the higher your rates will be. Your EMR is a way to measure this claim history and predict future costs.

A good EMR is one that is below average for your industry. For example, if the average EMR for construction companies is 0.85, a company with an EMR of 0.75 would be considered a good EMR.

HOW TO REDUCE EXPERIENCE MODIFICATION

So, how can you reduce or improve your experience modification rating? Below, we will provide you with some guidance.

IDENTIFY YOUR RISKS

The first step is to identify your risks. Each business will face its own unique set of them. Conduct a risk assessment to find out what your business’s risks are. As the adage goes, “you can’t fix what you don’t know.”

IMPLEMENT A KILLER SAFETY PROGRAM

At the core of a low experience modification rating is a stellar safety program. After all, no injuries or incidents equals no claims—and no claims equal the lowest possible EMR.

Now, before you doubt the effectiveness of a top-notch safety program, let’s look at the statistics. The Occupational Safety and Health Administration (OSHA) reports that “employers who establish safety programs (and return-to-work programs) can reduce costs related to workplace illness and injury by up to 35%.”

With reduced costs up to 35%, imagine how much more you’ll be saving on your workers’ compensation premiums. The basics of your safety program should include:

  • Safety Meetings
  • Safety Tests
  • Safety Equipment and Tools (i.e. safety goggles, safety shoes)
  • The list goes on

Safety, of course, will look different for every industry. The bottom line, however, is to provide and do whatever you can to prevent employees from getting hurt or sick.

So, ensure that employees:

KNOW HOW TO SAFELY PERFORM THEIR WORK

Don’t assume employees ‘just know’ how to do their job or work off the bat. As an employer, it’s your responsibility to train and teach your employees.

HAVE THE PROPER TOOLS AND EQUIPMENT

For employers with remote employees, this might be as simple as providing ergonomic office equipment to reduce carpal tunnel workers’ comp claims!

Read on to learn what workers’ compensation looks like for remote employees.

ARE REWARDED FOR SAFE BEHAVIOR

Consider implementing a safety-incentive program.

OSHA recommends safety-incentive programs, which reward “workers for reporting near-misses or hazards.” Safety-incentive programs typically reward employees for reporting unsafe conditions and making the workplace safer altogether. Programs “provide positive reinforcement for reporting illnesses and injuries.”

A FINAL WORD

Throughout all of this, it’s crucial to ensure your management and leaders are on board. Additionally, by documenting the safety measures you’ve put in place, the chances of lowering your EMR increase; thus, decreasing workers’ compensation insurance premiums.

Underwriters will be more likely to provide better terms and lower insurance premiums for businesses that document and articulate what they’ve done and the steps they have in place to reduce risk. Depending on the size of your business, you could save thousands of dollars.

It’s a win-win.

Read on for more information on risk mitigation: what is it and how can you do it?

Understanding Classifications for Workers’ Comp Dual Wage

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What is happening with workers’ compensation insurance coverage in the construction industry today?

Well, according to Brenda Jo Robyn, founder of Competitive Edge Insurance, workers’ compensation rates are increasing in the construction industry.

Although rates vary by class, dual wage thresholds are going up—and what does this mean for employers? As dual wage thresholds increase, employers will be forced to pay their workers more to get them out of the higher-rated classes and into the lower-rated classes.

Interested in learning more? Click the video below to learn how to understand classifications for workers’ comp dual wage.

What is a Dual Wage Classification?

There are several classifications in The Workers’ Compensation Insurance Rating Bureau of CaliforniaÂź (WCIRB) for workers’ compensation.

These tiers classify employees within a category into two levels. Either:

  • An apprentice, or
  • A journeyman

An apprentice is essentially a beginner in the field whereas a journeyman knows their trade.

Using actuarial data for losses, the WCIRB found that journeymen, those who know their trade, have fewer injuries—so they give them credits.

The Apprentice Classification

The apprentice wage, or lower wage, pays more per hundred dollars than the journeyman for workers’ compensation because lower-wage workers have the most claims.

Why? Simply put, they have less experience. An apprentice is more likely to hit their finger with a hammer than someone a journeyman who has been in the role for 20 years, for instance.

The Journeyman Classification

Journeyman wages, or the high wage, receive credits and therefore, pay less per hundred dollars for workers’ compensation coverage.

Why Was Dual Wage Classification Created?

The dual wage system was created, in the highest risk classes of construction, in order to avoid penalizing the entire group of construction.

Workers who are experienced journeymen are charged less for workers’ compensation per every hundred dollars than workers who are newer to the industry.

In short, the dual wage is based on their wages.

Dual Wage is Increasing

The WCIRB has suggested levels over time on where the split is that delineates who’s an apprentice vs. a journeyman. 

These levels have gone up over the years. In fact, most dual wage will increase by dollar $2 every two years.

There are 16 classes in the construction area which move back and forth. Some of them haven’t moved since 2018. For instance, for roofing, their split level is at $27 and has been that way since 2018.

Others move every couple of years. Carpentry, for example, was $35 in 2021. Now, in 2022, it’s increased to $39.

That’s a big jump! That’s $4 to move someone into the journeyman wage.

How Does a Business Owner Save Money on Their Workers’ Compensation Insurance?

So, how do you combat these raises? Risk mitigation. This includes:

  • Managing your experience modification rating (essentially the number that the WCIRB gives you to grade you for losses)
  • Maintaining a safe workplace
  • Supporting mental health awareness to reduce burnout
  • Emphasizing  proper employee training
  • Developing and distributing an employee handbook and code of ethics policy
  • Implementing a handbook auditing procedure

Interested in learning more? Read on in our article “Insurance Trends in 2022: What to Watch For.”

Workers’ Compensation Rates are Rising: What Can You Do?

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As many business owners may have noticed, workers’ compensation rates are rising. What does this mean? Why is this happening? And most importantly, what can you do as a business owner in response?

Read on to find out.

Why Workers’ Compensation?

If you’re a business owner or an individual who is planning on employing workers when starting a new business, California state law requires you to invest in workers’ compensation insurance.

Why? Employers purchase workers’ compensation insurance to cover the medical costs and lost wages for work-related injuries and illnesses of employees. In turn, workers’ compensation protects your company against employee lawsuits.

Worker’s compensation coverage can help pay for:

  • Immediate medical costs (i.e. emergency room expenses)
  • Ongoing medical costs (i.e. physical therapy)
  • Partial lost wages while the employee is unable to work

Lack of proper coverage can result in fines and even criminal exposure.

Workers’ Compensation Rates Are Rising

Over the past couple of years, workers’ compensation rates have been steadily increasing across the board. They’ve been rising by 7% on average; however, this figure depends on each industry.

Moreover, in July 2022, the Workers’ Compensation Insurance Rating Bureau of CaliforniaÂź (WCIRB) submitted its September 1, 2022, pure premium rate filing to the California Department of Insurance (CDI).

The CDI regulates California workers’ compensation rates with the help of the WCIRB, who makes recommendations based on the state’s loss ratio.

In this July 2022 filing, the WCIRB proposed a set of increased premium rates. On average, these rates are 7.6% higher than those approved the year prior on September 1, 2021.

According to the WCIRB, the average of the proposed September 1, 2022, advisory pure premium rates is $1.56 per $100 of payroll.

Read on for the WCIRB filing.

Why Are Workers’ Compensation Rates Rising?

So, why have these premiums been increasing in the first place?

The bottom line is that workers’ compensation rates are rising because there are simply more workers’ comp claims being filed.

Research shows there are many reasons why claims might be increasing, including:

  • Medical inflation
  • Workforce changes
  • The increasing average age of the workforce
  • Increased indemnity costs, and
  • Rising wages

Moreover, as individuals have begun to return to work in person, the number of claims regarding health and safety in the workplace has increased as well. These claims typically include:

  1. Employee concerns about exposure to COVID-19 due to unsafe working conditions, or
  2. Situations where employees allege they were wrongfully denied a request for workplace accommodation or leave

What Can Business Owners Do?

With this rise in claims, what can you do to protect yourself as a business owner? You can prevent workers’ comp claims by:

  • Prioritizing risk mitigation
  • Maintaining a safe workplace
  • Supporting mental health awareness to reduce burnout
  • Emphasizing  proper employee training
  • Developing and distributing an employee handbook and code of ethics policy
  • Implementing a handbook auditing procedure

While this list only showcases a few of many ways to avoid high workers’ compensation premiums, it’s important to remember that it’s up to all employers collectively to keep their employees safe—thus, lowering the number of claims being filed annually.

How Much Risk Does Your Business Hold?

If writing your hefty workers’ compensation check has begun to pain you, at Competitive Edge Insurance, we challenge you to ask yourself a question: “Am I, as a business owner, doing everything in my power to create the safest workplace possible?”

If the answer is no (which it typically is), get in touch with our team today to learn what else you can do.

Learn more about 2022 workers’ compensation changes by reading our article “Insurance Trends in 2022: What to Watch For.”

What Does Workers’ Comp Look Like for Remote Employees?

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Due to the COVID-19 pandemic, remote work is more common than ever, but how does workers’ compensation work for remote employees? How can an injury be proved when the individual is not in a corporate setting? What does workers’ comp look like for remote employees, and what does it cover?

Brenda Jo Robyn, founder of Competitive Edge, joins us on video to answer all of these questions.

Are Employers Required to Provide Workers’ Comp Coverage for Remote Employees?

Yes. Employers are required to provide workers’ comp for all employees, whether they’re in the office, out in the field, or in their homes working.

What Does Workers’ Comp Cover for Remote Employees?

“Workers’ comp covers everything the same across all policies and all carriers,” says Brenda Jo. “What’s different are the rates that are charged based on the payroll, the industry, and the number of employees per class code within that industry.”

All of these elements dictate the rates based on which carrier takes the coverage for the employer.

Interesting to note is the new class code that was created when remote work skyrocketed. In California, a new class code was created for telecommuting. With this new class code, you have to be at home working or in a remote workplace 50% of the time or more.

If you are coming into the office for work, you will still be considered an office employee; otherwise, you’ll be in the new class code at a very inexpensive rate. Regardless, all employees will still be covered.

How Can Employers Prevent Claims From Being Made?

It’s tricky. “It’s been a really difficult thing for employers to make sure that all of their employees are set up ergonomically for remote work,” says Brenda Jo.

Setting up ergonomically includes:

  • Ensuring cords are not in the way of tripping
  • Identifying where remote employees are sitting
  • Identifying how remote employees are sitting (as to not strain their necks, etc.)
  • And more

Some employers have hired ergonomic consultants who help remote employees set up their workplace correctly, in an attempt to avoid workers’ compensation claims.

How Can Remote Employees Make Workers’ Compensation Claims?

Things get tricky when it comes to a claim made at an individual’s house or a local cafe, for example.

Let’s say a remote employee is working at a Starbucks when they slip, fall, and get injured. Brenda Jo tells us it’s going to be hard to see where that claim will fall. 

“There’ll be a lot more investigation depending on how severe the injury really ends up being,” says Brenda Jo. “You can make that claim [as a remote employee], valid or not. Then it’s up to the carrier to decide whether the claim is valid through their inspections, investigations, as well as doctor’s reports, etc.” In some cases, it might include an applicant attorney getting involved.

Read on to learn more about what to expect this year from workers’ compensation policy renewals.

Workers’ Compensation Policy Renewals: What to Expect

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January 1st sees the most number of workers’ compensation policy renewals. What does this mean, and what can we expect during the first month of 2022 as a result? Let’s talk about what to expect in terms of premium increases and risk mitigation.

Today, we’re handing over the mic to Brenda Jo Robyn, founder of Competitive Edge Insurance. Here’s what she has to say.

What Does January 1st Mean for Businesses?

January 1st is typically the day when the highest volume of workers’ compensation policies will renew.

Right now, there’s a backlog of quotes, which results in stressed underwriters and quotes coming out late.

According to Brenda Jo, the one thing you can expect is premium increases this year. “There is going to be quite a significant adjustment in several areas in which companies can expect to see,” says Brenda Jo. “Ten to up to 80% increases in their premiums based on the class code.”

Why Is This Increase Important?

People should be talking about this.

“I think for many, it’s going to come as a shock,” says Brenda Jo. “However, if they’re working with their broker, they’ll have already known about this since October and make plans accordingly.”

If your business is going to have that much of an increase, you need to decide how your pricing structure for your services or products will change in the next year to compensate.

“It’s really important to know what you’re walking into,” says Brenda Jo. “The rate increases will start on 01/01 and it’s carrier by carrier.”

What Determines Premium Increases?

There’s a base that’s put into play by The Workers’ Compensation Insurance Rating Bureau of California (WCIRB), which is our rating and statistical bureau for data. The WCIRB gives us the trends and where to go.

It’s important to note, however, that carriers can apply a lot of credits.

Elements that might bring about credits include:

  • Risk mitigation
  • Safety policies in place
  • Safety training
  • Low turnover 

Some carriers can give credits from five to 40%, depending upon the class code.

For those of you who are interested in learning more about changing costs in 2022, check out this video when Brenda Jo speaks about what to expect from changing contractor costs.

Understanding the Basics of Workers’ Compensation

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Workers’ compensation is an important part of business for any employer. Having workers’ compensation insurance helps protect both employers and employees, and is required by most states.

Workers’ compensation insurance can help recover an employee’s lost wages while they recover from a work-related injury or illness or even support family members if an employee is killed in a work-related accident. This type of insurance can be complex, so we’re here to help you in this article: “Understanding the Basics of Workers’ Compensation.”

What is Workers’ Compensation?

“Workers’ compensation is a form of insurance, paid by employers, providing wage replacement and medical benefits to employees who are injured during the course of working for the insured.”

These wages and benefits are provided in exchange for eliminating the employee’s right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

What Does Workers’ Compensation Cover?

Specific workers’ compensation coverage laws vary depending on your state. The most common compensation requires workplace injury insurance to include:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 
Workers Compensation Basics

Who is Required to Purchase Workers’ Compensation Insurance?

Does every business need to purchase workers’ compensation insurance? The need for insurance falls on a state-by-state basis. 

In California, for example, “all employers must provide workers’ compensation benefits to their employees under California Labor Code Section 3700. If a business employs one or more employees, then it must satisfy the requirement of the law,” according to the California Department of Industrial Relations.

“State rules are typically based on the type of business entity you have (sole-proprietorship, partnership, LLC, corporation) and your total number of part-time and full-time employees. In most states, one or more employee will trigger coverage requirements,” according to Workers Compensation Shop.

Does My Small Business Need Workers’ Compensation?

Short answer? Most likely. Insureon tells us that for almost all businesses in the United States, workers’ compensation insurance isn’t optional.

“Small businesses typically need a policy in place as soon as they hire their first employee. Even when not required by law, this policy provides important protection against medical expenses and employee lawsuits related to workplace injuries.”

Don’t worry—Competitive Edge can help your small business find insurance.

If I Am a Contractor, Do I Need Workers’ Compensation?

When you’re a contractor, your work can take you anywhere! This is exciting, but also opens up a window of opportunity for injury or illness—which is a much heavier financial burden to carry when you’re flying solo.

Think about what an injury on the job might mean for your future or work. By investing in workers’ compensation, you can protect yourself from the exciting, but risky unknown that lies ahead.

For more on workers’ compensation for independent contractors, please read on here.

Why Is Everyone Talking About Workers’ Compensation Now?

With the arrival of COVID-19, many people wondered if the contraction of COVID-19, and thereafter the time necessary to quarantine at home, was compensable under state workers compensation acts. 

The answer to that question still remains unclear but is a topic of discussion. 

According to the National Council on Compensation Insurance (NCCI), “workers compensation laws provide compensation for ‘occupational diseases’ that arise out of and in the course of employment, many state statutes exclude ‘ordinary diseases of life’ (e.g., the common cold or flu).

“There are occupational groups that arguably would have a higher probability for exposure such as healthcare workers. However, even in those cases, there may be uncertainty as to whether the disease is compensable.”

Where Can I Get Workers’ Compensation Insurance?

From the State Compensation Insurance Fund (State Fund) or a licensed insurance company. In some cases, employers might be able to self-insure.

How Much Does Workers’ Compensation Insurance Cost?

The fast and hard answer: It depends! Rates can vary from carrier to carrier and from state to state. By comparing rates and working with a trusted insurance professional, like our team at Competitive Edge, you can find a carrier that best fits your needs.

Although cost is a big factor to consider, it’s also important to look at:

  • Services provided
  • What industry the carrier is in
  • Access to doctors
  • Access to the claims adjusters

What Happens if I Get Caught without Workers’ Compensation?

For employers who think the money saved by not investing in workers’ compensation is worth it, perhaps it would be beneficial to detail the extreme consequences of not having workers’ compensation.

Failing to have workers’ compensation is a criminal offense.

In fact, section 3700.5 of the California Labor Code makes it “punishable by either a fine of not less than $10,000 or imprisonment in the county jail for up to one year, or both.”

“Uninsured employers can be levied a fine of $10,000 per employee on the payroll at the time of injury if the worker’s case was found to be compensable, or $2,000 per employee on the payroll at the time of injury if the worker’s case was non-compensable, up to a maximum of $100,000.”

The bottom line: You can face up to $100,000 total if you are an employer who is caught without workers’ compensation insurance!

Employers who claim to have been “unaware” of the need for holding workers’ compensation insurance still face the consequences. Although obtaining workers’ compensation can be expensive, especially for those employers who frequently have claims made against them, there is no “savings” worth not having workers’ compensation insurance.

At Competitive Edge Insurance, we believe the first step is for your business to show us under the hood so we can help build your case to the carrier to get the right coverage at the best price based on your real-world conditions.

For more on how to prepare for employee claims and what you need to know about workers’ compensation for independent contractors, please read on here.

How does Workers’ Compensation Insurance Work?

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Picture this scenario: You’re at a construction site and a worker falls off the roof and falls and breaks their leg onto floor tiles, also breaking the tiles. What would be covered in that situation, the leg or the tiles? 

What is Workers’ Compensation Insurance?

Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.

So, the worker’s comp covers the worker’s injury for falling off the roof. 

What is Covered with Workers’ Compensation Insurance?

Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 

Bonds 

One helpful way to understand this scenario is knowing the difference between performance and payment bonds.

Payment Bonds

In simple terms, a payment bond enforces that everything must be paid once a project is completed. Payment bonds are also surety bonds and are required for most state projects based on the Miller Act. 

The Miller Act was passed by the U.S. General Services Administration Public Buildings Service (GSA) with the intention to explain how payment bonds protect subcontractors and suppliers.

The GSA responds to any reports of nonpayment, following the legal action needed and protected by the Miller Act. The GSA states that “the Miller Act requires that prime contractors for the construction, alteration, or repair of Federal buildings furnish a payment bond for contracts in excess of $100,000.” 

Payment bonds additionally play a major role in construction. As an insurance company, we have relationships with carriers who understand the specifics of construction risk and can provide better solutions, better prices, and more comprehensive coverage—even for hard-to-place and high-risk companies.

Performance Bonds 

The main differentiator between payment and performance bonds is that a performance bond ensures the employer is satisfied with the job. While both are surety bonds, performance bonds can be helpful in industries apart from construction. 

A performance bond, according to Investopedia, “ensures the completion of a project. Setting these two together provides the proper incentives for laborers to provide a quality finish for the client.” 

Any type of bonding will cover e tiles or building materials that were broken.

Overview

If an employee falls off the roof and hurts their leg and breaks the tile, the  Workers comp covers the worker’s injury for falling off the roof. Bonding covers the broken tiles from his attempt not to fall off the roof. 

The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always.

Read about Worker’s Compensation for Independent Contractors here. 

BEWARE: Workers’ Comp Insurance for Independent Contractors

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As you may know, most states require employers to have workers’ compensation insurance. These insurance policies can help recover most of your employee’s lost wages while they recover from a work-related injury or illness.

It also helps to cover your employee’s medical expenses as it provides their family with death benefits if they, unfortunately, pass away.

What is Workers’ Compensation Insurance?

Workers’ compensation insurance are policies that provide medical benefits and wage compensation to workers injured on the job, in exchange for eliminating their right to file a lawsuit against their employer’s negligence.

Workers’ compensation benefits are designed to help employees if they are unable to work, cover medical expenses, as well as other expenses and rehabilitation costs associated with disability or illness. As you look to explore workers’ compensation options, it’s important to look for one that provides adequate coverage and compensation for your employees.

When you invest in a properly designed policy, it ensures you and your employees remain financially secure. It’s also important to look at the specific benefits that are offered within your policy. Typical workers’ compensation insurance policies cover medical benefits.

What is Covered with Workers’ Compensation Insurance?

Specific workers’ compensation laws vary depending on your state; however, the most common compensation states that require workplace injury insurance include the following:

  • Payment for lost wages
  • Vocational rehabilitation
  • Permanent disability
  • Temporary disability
  • Medical costs and treatment 

How to Prepare for Employee Claims

Accidents happen. It’s part of life. It doesn’t matter how safe your business is, there’s always the chance an employee will get sick or injured on the job. For this reason, nearly every state requires business owners to have coverage for their employees. Different states, however, have various regulations. 

Ensure you have an expert on your team to help understand what your specific business needs are. For example, if your business is in California, you are required to obtain workers’ compensation insurance even if your business is as small as just one employee. In Florida, however, you need this coverage if you have at least four employees. 

Signing up for workers’ compensation depends on the location of your business. Typically, states recommend you purchase workers’ compensation insurance through a private insurance company, while others may require you to buy it through a state-run insurance fund.

It’s also important to understand the cost associated with investing in workers’ compensation insurance. The risk associated with your specific business will determine the cost of your insurance payments. This all sounds pricey, but remember: the costs associated with not having workers’ compensation insurance might be the motivation you need to start considering your options.

Without workers’ compensation insurance, you put yourself and your business at risk of fines, and could even face potential jail time for not complying with regulations. If an employee runs into a problem that would have been covered by workers’ compensation insurance, you may be responsible for covering their expenses, and you may also open yourself up to litigation.

What You Need to Know About Workers’ Compensation as an Independent Contractor

Every contractor needs general liability insurance. While the law does not require it, it is considered best practice to ensure against the kinds of injuries and lawsuits general liability is targeted to.

Large contractors may own commercial buildings that require property insurance, where smaller contractors or those with a specialty may need different coverage. 

At Competitive Edge, we don’t claim to know your needs until we talk to you. What’s right for one company may not be a choice that meets your needs. Even if you have suffered a shock loss, large claim, or lawsuit, and find that your options have narrowed, we can work with you.

The first step is to show us under the hood so we can help you find the right carrier and coverage to protect your business today and always. Contact Competitive Edge Insurance today for more information about high-risk coverage today!

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