The Expense Constant charge is a fee charged on every Workers Compensation policy, regardless of the policy size. It is a fixed, flat expense charge that is applied in addition to the premium developed for that policy, usually ranging between $100-$300.
This arbitrary amount is ultimately the cost for administering the policy and is based on the fact that the expense factor on such risks is inadequate to cover the cost of issuing and handling the policy.
This is similar to shop fees at when you take your car into the shop. It is a fixed amount that states have allowed insurance carriers to charge their policyholders.
J&L receives a question on the expense constant charge at least a few times a year. Employers question how the expense constant charge figure is calculated as there seems to be no rhyme or reason to the premium charge.
Examine your policy in the Dec pages or the final premium audit bill. You will see the expense constant charge in that billing. There is not much one can do to protest it.
All states allow this cost. The charge is very small. If the amount is over the usual $300 max, you may want to question it by calling your agent or carrier. A mistake on the expense constant charge is rare.
Article provided by James J Moore, AIC, MBA, ChFC, ARM. All articles are original content. Check out the full website at www.cutcompcosts.com.