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Better Understanding your Workers’ Comp Coverage

Better Understanding your Workers’ Comp CoverageWorkers’ Compensation is a required coverage for most employers. However, it is common for certain components of the benefits to be misunderstood or unknown altogether. In order to better understand your NJ Workers’ Comp insurance program, consider these tips.

Underestimating Payroll- At the end of your policy period a final audit may be conducted to capture your actual payroll for the policy term and determine your final premium, according to Winmark Business Solutions. The higher the payroll is, the more you will owe and vice versa.

If you are considering opening another location to your business, it is important to budget for an increase in premium, especially if you are a larger company and are expecting to add numerous employees.

Audits- While audits may seem intimidating, it is in the employer’s best interest to respond in a timely manner should they be contacted by an auditor. If they refuse, the auditor may increase payroll of workers’ compensation 50 percent.

Officer Inclusions & Exclusions- Dependent on your state, you may be required to submit an Election of Coverage Form to the Insurance Bureau, says WBS Online. Regardless of choosing to include or exclude officers from your policy, the decision should be documented. In turn, unexpected premiums can be avoided in the event of an audit.

Canceling Mid-Term- While it is generally acceptable for an employer to cancel a policy prior to its expiration date, the insurance provider may apply a ‘short rate’ penalty upon cancelation. Typically, this number is calculated based on how long the policy was in effect. Therefore, a penalty for a policy that was canceled after six months of service would traditionally be less substantial than a policy canceled after two months.

Experience Modification- Once a business is established and their losses can be calculated over the course of a few years, a modification can go into effect. If the business experiences minimal loss and claims, they are eligible for a discount on their premium. Conversely, if the business’ loss exceeds initial projections, they will be required to pay more.

At Associated Specialty Insurance Agency (ASIA), we strive to provide ample knowledge about Workers’ Compensation to allow you to make the right choices to protect your business. Our unparalleled underwriting experience seeks to protect your needs throughout our target states of New Jersey, Pennsylvania, New York, Connecticut, Delaware, Maryland, Virginia, North Carolina and Florida. For more information, contact us today at (866) 679-7457.

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