Are you dreading your upcoming workers compensation renewal? If you manage to find something else to do every time you consider digging through your policy to check for changes you will be glad you took a moment to read this article. You may even feel like pulling out your declaration pages and taking a look while you are reading. Don’t laugh…you just might.
What type of business entity is your business? Different business entities treat the owners of the business differently for workers’ compensation. It is very important that you understand how your corporation treats you. Below is a quick guide:
S-Corp – Owners are automatically included in workers’ compensation coverages. If you do not want coverage you have to exclude yourself.
C-Corp – Owners are automatically included in workers’ compensation coverages. If you do not want coverage you have to exclude yourself.
LLC – Owners are automatically excluded in workers’ compensation coverage. If you want coverage you have to include yourself.
Partnership – Owners are automatically included in workers’ compensation coverages. If you do not want coverage you have to exclude yourself.
Sole Proprietor – Owners are automatically included in workers’ compensation coverages. If you do not want coverage you have to exclude yourself.
BONUS TIP If your corporation excludes you OR you have specifically elected not to have workers’ compensation coverage your payroll should not be included in any of the figures for your renewal. Double check it is not this is a very common mistake that costs you money.
The declaration page of your workers’ compensation policy shows the various classifications for your workers and the current amount of payroll you estimated. Now is the time to review that information very carefully to make sure it will be accurate for the upcoming year.
1. You can include the additional payroll for the new employees now and pay the premium spread out over whatever billing plan you have selected.
2. You can contact your agent when you hire the employee and have your payroll increased at that time.
3. You can wait until your policy renews next year. Then you will be audited and you will owe a lump sum additional premium for the increase in payroll.
1. The changes in your operation could change your workers’ compensation coverage and your entire insurance portfolio.
2. It is a really good idea to discuss the changes with your agent before you make them. Don’t wait until after you make changes or you may end up with a premium increase you hadn’t anticipated.
After your current workers’ compensation policy expires you will get a request from the insurance carrier for an audit to be conducted. Sometimes they mail you a paper form or ask you to complete an audit online. Other times the insurance carrier will schedule for an auditor to come out to your business and do the audit in person. Now is the time to make sure you have all the payroll documents you need and the answers to the questions above ready so there isn’t a mistake made on the audit. Every day we see costly errors that result in big (think thousands of dollars) premium bills that are due in one lump sum. Errors that could have been prevented saving you a lot of time and money.
BONUS TIP Click Here to Read: Everything you need to be prepared for your Workers Compensation Premium Audit or look for it on our blog Chalk Talk