Workers Comp Small Companies Strategy
Small Companies Can Operate Like A Self-Insured (in a way) – From the last post we are going to start with the smallest companies and work our way up to the largest. The theme is saving money by operating like a Workers Comp fully self insured.
- No Coverage – this is a very controversial topic. I am not saying to avoid paying Workers Comp premiums. In certain states, there is a minimum of employees that are required for the State to require that you have Workers Compensation insurance. Some states will not require a company to have Workers Comp coverage if they have less than three employees. Make sure to email us or call your State’s Department of Insurance before making this decision.
- Ghost Policies – this is another controversial way to cover a small company’s Workers Comp burden. Companies can purchase policies that provide nothing other than a certificate of insurance for Workers Comp coverage. I have come across these with trucking companies. Before buying one of these policies, make sure that all the options are explained to you.
- Small Deductible – As companies grow, this may be a viable option. The employer can pay all claims out-of-pocket to a certain amount, say $300. This cuts the small claims down significantly. There are many options on this type of coverage, such as all claims being filed with the insurance carrier, but the first $300 being billed back to the employer. One of the complications of doing this is when the employer does not report a serious claim timely. There are many ways to use the small deductible programs.
The first three options above are for the smaller companies to retain some of their risk like a larger company that is fully self insured. When an employer retains some of the risk, they can control their Workers’ Comp costs at least partially.
We will move onto the next three tomorrow.
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