is there anyway to estimate how much worker's comp will cost me?

Question

We are starting a small brick paving company, and I know we will need worker's comp coverage. Does anyone know how to estimate the cost.

Answer 1

Workers' comp insurance is based on payroll dollars spent, so first you must estimate the expected payroll expense you will incur. You must do this estimate broken down by job category (clerical, masonry, sales, etc.) because there are different comp rates for each category (known as 'class'). Note that company principals may elect not to be covered, but all other employees must be covered. Each state will have different statutory limits. Each state will also have different rates if you're starting a multi-jurisdictional firm.

Because you are a new firm and do not have a history, NCCI the company that promulgates 'experience modification rates' (called EMR or mod) has no basis from which to work and your initial rates will be unmodified by an experience discount (or penalty).

Once you investigate the rates for the classifications and states involved in your work, you will have a key portion of what's called 'payroll burden' which includes direct costs which are driven by your payroll, like FICA, liability insurance, FUTA, SUTA, health insurance, etc. When this burden is added to your worker's pay rates, you will have a true rate for your labor cost to use for estimating/pricing.

One last thing - find an insurance agent who specializes in construction (even better if (s)he has other paving contractor clients). A good agent will walk you through everything and make the process understandable.

Answer 2

Rules/laws differ from state to state, you are best advised to call the agent that is writing your liability insurance and ask them, this is what you would do if you are in Minnesota for example: What you do is get a minimum premium work comp policy from the state pool (from whatever state you are in). Go to the agent that currently writes your liability and tell them you need a work comp policy but have no payroll and want to exclude owners/officers (unless you want to include yourself, then you need to use a payroll number). The agent will then get the state applications ready and figure out the premium, the premium will be whatever the minimum premium is for the Work Comp Class Code they put you in, I'd imagine in your case this is the carpentry code. If I were to guess the minimum premium for that code is probably around $750, so you give the agent the $750 and they turn the applications and the money over to the state pool. The good news is that when the policy year is over, you'll get all of that back except for the policy fee (usually like $200) once they do the annual audit and see that you have $0 payroll they'll refund a large chunk of it back. This will satisfy the supplier as you have a work comp policy and can give them a certificate showing that. That's how it works in Minnesota for contractors that have no employees but are required by contract to have a work comp policy.

Answer 3

In Wisconsin, Workers Comp is based on a rated cost and the Company's safety experience. The experience rating is called a "mod." The state's rated cost is the average cost of worker's comp for that job as a percentage of payroll cost. If your company's experience is worse than average you will pay more if your company's experience is better than average you will pay less.

Any good business insurance agent should be able to help you.

Good Luck

Answer 4

this probably wont help, but contact the insurance companies. i do know that drug screening post accidents will cut down costs usually. depends on who you go with.

Answer 5

My advice would be to call three different insurance brokers and ask for a quote.