The California Department of Industrial Relations states that “[…] California employers are required by law to have workers’ compensation insurance, even if they have only one employee. And, if your employees get hurt or sick because of work, you are required to pay for workers’ compensation benefits.”
Workers’ compensation insurance is extremely important for both employers and employees, no matter the size of the business. Workers’ compensation insurance can help pay for medical expenses and benefits in the event that a worker becomes ill or injured in the course and scope of their job. Businesses that operate in industries like construction and trucking carry a relatively high risk, as they involve highly mentally and physically taxing labor.
Understanding Workers’ Compensation Insurance Rates
Experience modifier ratings are used to determine how insurance policies will be underwritten. The higher the incidents of loss, the higher the experience modifier rating, which means the higher the insurance premium. Thus, it is in the best interests of the business to practice and improve risk management, so as to not only prevent accidents, but also to prevent loss.
Starting at 1.0, modifiers will increase or decrease based on the amount of loss experienced. As time passes and if there are no claims, the modifier can decrease. For instance, an experience modifier of 0.75 means that the policyholder receives a discount on their insurance premium. An experience modifier can be at a surplus of 1.7 or 1.8.
Improving Risk Management For Construction
Construction businesses should have safety systems to mitigate the risks that leave their employees prone to hazards.
Do you have protocols to ensure that your employees are wearing PPE? Do you have a fall-protection program? Do you have a safety checklist to prevent accidents from happening? These are just a few questions that are critical to assessing where your business is at risk of experiencing loss.
Many construction businesses make the mistake of simply hiring workers with skills and experience and then providing zero training around safe operating. For instance, if the job requires cutting or breaking, the employee must perform safety protocols—closing the saw, replacing the guard, locking the ladder, etc.—before and after operating machinery and performing the task.
One of our clients, a San Diego demolition contractor, had a gruesome accident occur on-site with an employee who sawed their hand off. Safety operating procedures had not been documented.
Our San Diego workers’ compensation insurance team helped our client develop documentation including a safety training checklist, which proved to improve worker proficiency. Documentation on where and how certain machinery should be operated, such as what terrains a Bobcat Tilt can or cannot be used on, were also developed. Since the implementation of the safety training checklist, our client made no claims, which lowered their loss experience and thus their insurance rates.
We also consult employers on how to use safety measures to make better hiring decisions. The screening process should involve a test scenario in which the candidate must demonstrate whether or not they can follow a safety checklist. Almost every job candidate will attest to adhering to safety protocols, but the interview screening process will determine who actually will. Candidates who demonstrate job skills and knowledge but lack adherence to safety protocols should not be hired.
At SWAN Insurance, we’re passionate about insuring construction businesses like yours, so that you can sleep well at night. We review current safety training protocols and systems and advise you on the implementation of improvements.
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