Contractors Workers Compensation Insurance – Protect Your Mod

Most contractors have at least a general knowledge of workers compensation insurance. They know that they need it and they know it can cost a lot of money. But only a few really understand the experience modification factor and what it could mean for their future construction company insurance policy costs. This little primer will help you understand just how important it is to protect your mod and how to do it.

The experience modification factor of workers compensation policies, referred to as the experience mod or just mod for short, is the insurance industry’s way of assigning higher rates to businesses with poor loss experience and lower rates to those who have had more favorable loss experience. Each business has its own unique experience modification factor and this factor is applied to the rates on their policy. For example, if you have had a lot of losses, or perhaps a few large losses, you might find yourself with a mod of say, 1.35. If this is the case, then your workers compensation insurance policy premium will be adjusted upward by 35% to reflect your bad experience. Likewise, if your company hasn’t has a work comp loss for several years, your mod might drop as low as .80 and this would mean a 20% reduction in your overall workers compensation policy premium.

So how is this mod calculated? Well, the first thing you need to know is that the mod is calculated based on past experience. That means what happens today will take several years to come back and bite you. Also, the experience period for the mod in North Carolina is 3 years, so once you get some losses in your mod calculation, they will stay there for a while. I want to leave a more detailed explanation of how the mod is calculated to a later blog, but for now, understand that it is not only the number of losses (called frequency) that plays a part, but also the amount paid out (called severity) that impacts the mod calculation. And a little of both, frequency and severity can really run up your mod.

So what can you, as a business owner, do to protect your mod? A lot of how your mod will affect you, both good or bad will be determined by which insurance company you choose for your workers compensation policy. I say this, because, although you may be as careful as you can to avoid injuries among your workers, there is no substitute for an insurance company that is actively working for you to help you prevent claims and reduce the severity of existing claims. So when evaluating which workers compensation policy to purchase, you should consider more than just the premium on the first policy. Find out what that insurance company and that agent are going to do to keep your costs low over the long term.

Choose a workers compensation insurance company that will work with you to help you with both prevention and severity reduction. Prevention can come in the form of safety inspections, and loss control techniques that the insurance company can share with you. Reduction can come in the form of programs that help your injured workers get back to work more quickly. Some of the best workers compensation insurance companies even have their own nurses and doctors. Also, you want to purchase your workers comp coverage from a company that assigns case managers to each claim to stay on top of all the medical bills and the disability payments to keep the payout as small as possible.

At Clinard Insurance Group, in Winston Salem, NC, we specialize in helping the owners of small contracting companies navigate the complex waters of insurance policy and insurance company selection. We can help you find a pro-active insurance company that will help you reduce the number of work comp claims and keep the claims that happen from spiraling out of control. Because contractors insurance is our specialty, we can help you with your insurance needs whether you need help with carpentry insurance, carpet cleaner insurance, electricians insurance, flooring insurance, HVAC insurance, grading and excavating insurance, insulation insurance, landscaping or lawn care insurance, masonry insurance, painters insurance, plumbers insurance, siding insurance or even guttering insurance . We have built special niche programs for many different types of contractors and we encourage you to call us, toll free, at 877-687-7557 or visit us on the web at www.TheContractorsHelper.com.

The source information for this article was taken from other articles which can be found in their entirety at www.InsuranceAnswerGuy.com.

Construction Insurance in NC – small contractors, don’t forget your work comp insurance

I hear it so often with artisan contractors, they don’t think they need workers compensation insurance because they have too few employees or the general contractor that they work under provides that coverage. While these are reasons that allow them to legally avoid buying a policy, in both cases they leave the artisan contractor’s destiny in the hands of others and may ultimately cost the small contractor his or her business. Here’s the real scoop on workers compensation insurance in North Carolina for small contractors.

It doesn’t matter which area you work in, whether you are hunting for painter insurance, plumbing insurance, lawn care insurance, carpenter insurance, landscaping insurance, grading insurance or even insulation or flooring insurance, you really will do better to always purchase a work comp policy for your small contractor business. Let’s take a look at the three reasons people don’t purchase workers comp insurance for their small business.

Reason #1 - Less than 3 employees. While it is true that in North Carolina, if you have less than 3 employees, then the state will not require you to purchase a workers compensation insurance policy, what is seldom said in the next sentence is that whether or not you buy insurance, you are still on the hook for the claims. The workers compensation insurance policy was created as a compromise. Workers gave up their rights to sue their employers in most cases and the trade off for them was that employers agreed to pay the benefits associated with injuries and sicknesses on the job according to the statutory payouts required by each state. So, as the employer, you will have to pay for your employees job related injuries, sicknesses and time out of work in accordance with the NC workers compensation statutes. If they are permanently disabled or even out of work for several months, these costs could run into the tens of thousands and possibly close your business. Many small contractors are choosing not to buy workers compensation insurance based on their number of employees and this could have a devastating effect on their business.

Reason #2 - It costs too much. Let’s face it, workers comp insurance can be expensive. But if you have an agent that specializes in your type of business, then you will have a much better chance of getting your policy set up in a way that saves you the most money while still protecting you from financial ruin. And really while the short term costs may seem high what is your entire business worth?

Reason #3 - The general contractor covers it. While for some small contractors, this may be true, there are several reasons why this is a poor choice. First of all, if the general contractor were to go out of business, or let their insurance cancel through some error, then you are back on the hook and if the claim is large enough, then there goes your company. Also, if you do work not associated with that contractor then you are back to going bare. Secondly, most general contractors add a large premium to the rate that they are charged to carry you on their policy so you will probably find you are paying more than you should to be covered this way.

In almost every case, it is a better choice for small, artisan construction companies to purchase their own workers compensation insurance policy directly. The risks associated with going bare, or riding on the general contractor’s coat tails are just too high.

At Clinard Insurance Group in Winston Salem, NC, we specialize in helping small artisan contractors of all types with their insurance needs. We have special insurance programs designed for carpenters, carpet cleaners, concrete and masonry construction, electricians, flooring installation companies, grading and excavating contractors, guttering and siding installation companies, HVAC companies, landscapers and lawn maintenance companies, painters and plumbers. We work hard to help all of our clients become informed insurance buyers. If we can help you with your business insurance needs, please call us, toll free, at 877-687-7557 or visit us online at www.TheContractorsHelper.com.

The source information for this blog article was pulled from information which can be found on line at www.InsuranceAnswerGuy.com