Save Thousands on Workers' Comp

Correcting errors in how your business is classified could pay off big.

When it comes to workers' compensation insurance, small mistakes cost big money. Businesses across the country are paying too much for workers' compensation insurance for mistakes as simple as how their business is classified. Fortunately, there's something you can do about it.

A business's classification is related to the level of hazard that jobs in that category typically involve, in turn affecting insurance costs. The two keys to getting classification mistakes fixed are patience and attention to detail. Insurance company underwriters and auditors can do little for a policyholder who is long on indignation but short on detail. Put in writing exactly why you feel the classification used is wrong for your business. Make reference to the specific descriptions in the manuals that you feel support your case. And then be sure to follow up. It's generally a good idea to go through your agent, as most insurance companies prefer that approach.

Make sure you get their initial response in writing. Set up a file and document it carefully with every letter, fax and e-mail you receive on the subject. Keep a detailed record of all phone conversations as well, noting date, person you spoke with and what was said. If they commit to a deadline or timetable for action, don't hesitate to follow up when those deadlines arrive.

If your insurance company refuses to reconsider, you're not out of luck. If your company has already been inspected by a rating bureau, you can communicate with the bureau and point out the specific areas in the report you feel are inaccurate or incomplete. Work your way up through the rating bureau bureaucracy and find the individual most experienced and knowledgeable in classification matters. Then send a detailed written communication to this person.

If a rating bureau has not inspected your company, consider requesting an inspection. Many rating bureaus charge significant fees for this service, so negotiate for the insurance company to pay or--if they don't agree--for the "loser" to pay. Once the inspection is arranged, prepare carefully and make sure the inspector understands all the key points you want to make. If the results of your inspection aren't favorable, carefully review the inspection report and see if there are any inaccuracies or omissions. If there are, immediately send a written correction and then follow up to make sure it's taken into account.

If you're unsuccessful and still feel your argument has merit, every state has some kind of appeals mechanism that employers can use to get classification decisions reversed. Your state's department of insurance can explain the process for your state.

Once the classification is corrected, look into whether you're eligible for a refund from previous years' overcharges. Classification mistakes are one of the most common causes of overcharges in workers' compensation premiums--and fixing them is one of the best ways to get your premiums lowered.

Edward Priz has worked in the insurance industry since 1976 as an insurance agent, consultant and expert witness and has specialized in helping employers reduce the cost of workers' compensation insurance since 1983. He is the author of Ultimate Guide to Workers' Compensation Insurance.

Editor's Pick

Everyone Wants to Get Close to Their Favorite Artist. Here's the Technology Making It a Reality — But Better.
The Highest-Paid, Highest-Profile People in Every Field Know This Communication Strategy
After Early Rejection From Publishers, This Author Self-Published Her Book and Sold More Than 500,000 Copies. Here's How She Did It.
Having Trouble Speaking Up in Meetings? Try This Strategy.
He Names Brands for Amazon, Meta and Forever 21, and Says This Is the Big Blank Space in the Naming Game
Business News

These Are the Most and Least Affordable Places to Retire in The U.S.

The Northeast and West Coast are the least affordable, while areas in the Mountain State region tend to be ideal for retirees on a budget.

Business News

I Live on a Cruise Ship for Half of the Year. Look Inside My 336-Square-Foot Cabin with Wraparound Balcony.

I live on a cruise ship with my husband, who works on it, for six months out of the year. Life at "home" can be tight. Here's what it's really like living on a cruise ship.

Business News

The 'Airbnbust' Proves the Wild West Days of Online Vacation Rentals Are Over

Airbnb recently reported that 2022 was its first profitable year ever. But the deluge of new listings foreshadowed an inevitable correction.

Business Solutions

Master Coding for Less Than $2 a Course with This Jam-Packed Bundle

Make coding understandable with this beginner-friendly coding bundle, now just $19.99.

Business News

'I Don't Feel Like It's Unreasonable': A-List Actor Refused Service At Hotspot For Not Following Dress Code

Academy Award-winning actor Russell Crowe had quite the afternoon after trying to stop at a Japanese steakhouse in Melbourne, Australia following a game of tennis.