Mistake 1: Wrong workers compensation job class
During a workers compensation audit, the insurance company's auditors may use the wrong classification codes. The purpose of the job classification is to help identify the activities in which the insured parties are involved and place them into appropriate categories. There are plenty of rules which govern the application of these classification codes. Ideally your business should be classified and later assigned to a code which most resembles the nature of your work. This is the same class code which is shown on your workers compensation policy. On the other hand, there are some exception classes which may be applied to your policy. There is an allowance for particular businesses to use multiple class codes on top of the standard exception classes.
In plenty of workers compensation audits performed by insurance companies, mis-classifications of job codes occur. Always watch out for whether you auditor has changed your workers compensation class codes or check whether this change has been made by the insurance company. Ensure that your key employees and subcontractor labor have been classified properly. While these are only a few issues, always ensure that the audit is carried out properly so that you don't have to pay for your auditor's (costly) mistakes.During a workers compensation audit, the insurance company's auditors may use the wrong classification codes. The purpose of the job classification is to help identify the activities in which the insured parties are involved and place them into appropriate categories. There are plenty of rules which govern the application of these classification codes. Ideally your business should be classified and later assigned to a code which most resembles the nature of your work. This is the same class code which is shown on your workers compensation policy. On the other hand, there are some exception classes which may be applied to your policy. There is an allowance for particular businesses to use multiple class codes on top of the standard exception classes.
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| Top Workers Compensation Audit Mistakes That Could Cost You Thousands |
Mistake 2: Alteration of the Experience modification factor
Complicated calculations are what make up experience modification factors. These figures help compare your company's experience with that of other similar businesses located within your industry. Once an audit is completed, the insurance company will recalculate your premium during which the experience mod will be applied again. Many errors are likely to occur during this recalculation of the premium.
Furthermore, insurance companies have very specific rules which they have to strongly adhere to when it comes to the application of these factors. To apply a factor to a policy, certain time frames must be met. An additional premium can apply to your company if the experience mod results are not applied properly. Have an independent source review the experience mod factor on a frequent basis.
Mistake 3: Workers compensation audit for subcontractors is payable by you!
Auditors closely watch out for uninsured subcontract labor when they are conducting a workers compensation audit. You will come across questions which are targeted at finding such holes which will result in additional premiums. Always keep in mind that the auditor is there on the behalf of the insurance company and not on your behalf; he will always favor the insurance company!
Complicated calculations are what make up experience modification factors. These figures help compare your company's experience with that of other similar businesses located within your industry. Once an audit is completed, the insurance company will recalculate your premium during which the experience mod will be applied again. Many errors are likely to occur during this recalculation of the premium.
Furthermore, insurance companies have very specific rules which they have to strongly adhere to when it comes to the application of these factors. To apply a factor to a policy, certain time frames must be met. An additional premium can apply to your company if the experience mod results are not applied properly. Have an independent source review the experience mod factor on a frequent basis.
Mistake 3: Workers compensation audit for subcontractors is payable by you!
Auditors closely watch out for uninsured subcontract labor when they are conducting a workers compensation audit. You will come across questions which are targeted at finding such holes which will result in additional premiums. Always keep in mind that the auditor is there on the behalf of the insurance company and not on your behalf; he will always favor the insurance company!
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| Top Workers Compensation Audit Mistakes That Could Cost You Thousands |
While it is legitimate to add on premium if an uninsured subcontract labor is found, errors may occur in this area. Often insured subcontractors may be erroneously included in the list of uninsured contractors. Always try to use insured contractors and do not forget to get the certificate of insurance. Without the certificate, you are likely to be charged for his workers compensation exposure too!
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