Insurance Reassurance

Between the fine print and the exclusions, strategies for staying covered

15 MIN READ

Your agent or broker should also help you save money. Kinsey says that he usually saves his clients between 15% and 35%.

How do you find this person? Network. Call your friendly competitors. See if your local or state trade association has negotiated group insurance rates. Two places to begin are NARI (www.nari.org) and the National Association of Home Builders’ Remodelors Council (www.nahb.org/remodelors). NARI chapters in Central Ohio and Oregon, for example, have workers’ comp programs.

BROKER OR AGENT? Independent brokers can bid your policies out to several insurers, including those offering hard-to-get coverage. “The key for me is having a great broker,” says Everett Collier, of Collier Ostrom Inc., San Francisco. “We’ve never had a liability claim in our 30-year history, but I can’t remember how many times we’ve had to change,” Collier says, as providers have stopped writing liability policies in California.

But an agent really knows the carrier and can more readily resolve problems, says Mark Leininger, who is both an agent and a broker to Collier Ostrom through NEK Insurance in Northern California.

Whichever route you take, make sure your carriers are “admitted” in your state. This means your state will intervene in policy disputes, and may guarantee coverage if the carrier fails. “You don’t want to take on a big insurance agency in the courts,” Leininger says.

REDUCE YOUR “MOD” A key factor in your workers’ comp costs is your “experience modification.” Your “mod,” explains Simmonds, “is the ratio of actual losses to expected losses. It’s one place that you control the cost of your workers’ compensation.”

Here’s how your mod is calculated. Each year, your workers’ comp carrier provides three years of your company’s claims, or losses, to your state’s workers’ compensation rating bureau. (Thirteen states use their own rating systems. The rest use the National Council on Compensation Insurance, www.ncci.com.) A mod of 1.0 means your company’s losses are the industry average. Lower losses will lower your mod; greater losses will increase it.

Then multiply your mod by your workers’ comp premiums, which the state sets at rates per $100 of payroll, depending on the position’s risks. “The experience mod can make or break a company,” Curotto says. For instance, if your mod is 1.2 and your competitor’s is 0.8, your workers’ comp rates could be many thousands of dollars more, depending on your payroll.

OPERATE SAFELY Meaningful safety programs are the best way to lower your mod and curb your workers’ comp costs. “Safety programs that are lip service aren’t going to do anything,” according to Simmonds. “The key is that the supervisors have to follow the rules. If the rules say to wear safety glasses on a jobsite, it’s over the first time he walks on site without safety glasses.”

Designate a “safety officer” who isn’t the owner, but is a senior employee whom employees trust and respect, Leininger advises. “Our safety officer interfaces once a year with our insurance agent,” says Mark Scott of Mark IV Construction, Bethesda, Md. “We get a letter — basically an ‘attaboy’ —that says he inspected our site and didn’t find any problems.”

About the Author

Leah Thayer

Leah Thayer is a senior editor at REMODELING.

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