Worker’s Compensation Audits…Avoiding Unpleasant SurprisesOutside Contributor
This time of year I often get calls from my clients wondering why they are getting huge bills from their insurance carrier….turns out most times it is the result of the annual audit. There are a couple ways to prevent this.
One is to use the “Pay as you Go” option that some carriers offer. You simply report the weekly or bi-weekly payroll to your Worker’s Compenstion carrier at the time you issue the checks. The carrier charges you based on the payroll you spent that month. It’s also a way to help cash flow in the ebbs and tides of the season; the less revenue the less payroll you should have, the more revenue, the more payroll. Your monthly Worker’s Comp premium will be driven by your monthly payroll.
Another method is to review your payroll as it relates to your policy on a quarterly basis. You know if your business is growing and you’re spending more payroll than you did the previous year (at least you should have a feel). Contact your Agent with a text or quick email and ask what the current payroll basis is. They should be happy to help you with a plan that will save you from that painful day when the audit bill shows up in the mail. Even if it does show up and you do owe it, many of the carriers will break it down in to a few payments.
The audit itself is challenging for many auditors who don’t really understand the Green Industry business. If you do both landscaping and lawn care with separate crews, or even the same crews, it is in your favor to keep track of the payroll separately. The auditors will pick up the entire payroll and 9 out of 10 times will classify you under Class Code 0042 (Landscape) and not Class Code 9102 (Lawn care). Class code 0042 is double the rate of 9102, so if they are truly focused on mowing and blowing you’re paying too much premium. I pick up new clients everyday whose primary focus is lawn maintenance and when reviewing their policy I see them classified as Landscapers. That has easily cut Work Comp premium in half for some of my clients!
It’s also good to have an agent who knows the Green Industry!
This post is provided courtesy of Tim Kearns. Tim has been in the green industry his entire career and is a regular go to resource for Landscape Today on topics involving insurance and risk management. His contact information is below.
International Insurance Brokerage, LLC