I read an article the other day in the May issue of Turf Magazine. It gave a basic introduction to understanding how workers’ compensation insurance operates across the country. Here is an excerpt from the article:

It’s one of those parts of the business that nobody likes to deal with, but if you ignore workers’ compensation insurance, it can put your business, and even your personal assets, in jeopardy.

Workers’ comp is mandated by the state governments and is also required by the federal government on federal properties and in maritime operations. At its core, workers’ comp is the statutory requirement that an employer provide an employee coverage for medical costs and some percentage of lost wages in the event they are injured in the “course and scope of employment.” Injuries that occur as a result of the negligence of the employee are still subject to coverage under workers’ compensation. Except in unusual situations, the employee may not sue the employer in negligence for injuries received on the job.

This is a simplified description of workers’ comp, and there are differences between various policies in various states and jurisdictions. It’s important to check the specific regulations in your state.

Keep in mind that this article approaches the topic from a national level and workers’ compensation insurance is governed by the insurance department of each individual state. In Florida, there are specific requirements for workers’ compensation insurance. Landscapers are required to carry workers’ comp when they have over 3 employees, but we recommend that your business has this coverage even if you have one part time employee. Florida has around 600 classifications that are used to group employees by the type of work they do, and the rates to compute the insurance policy premium are set for each of those classifications. The classifications for landscaping employees are 9102, 0042, 0106, 5183, 0005, and a few others can be used as well. The rates in Florida are proposed by NCCI and approved by the state government. The rating system used to compute annual workers’ compensation premium uses a factor that uses past losses and premiums paid. It is called the experience rating modifier and here is another excerpt from this article where the CEO of Amerisafe, Allen Bradley, briefly describes it:

“There are some things businesses can do to control their costs,” says Bradley. One of the things that drives costs for individual accounts, he explains, is their experience rating modifier, or e-mod, a calculation that’s typically done after a company has had premiums over $5,000 for three years. (For a company that has premiums over $15,000, that experience modifier might be calculated after a single year.) “If you’re absolutely average for the industry, your e-mod will be 1.0. If you’re better than average, it might be .9, so you’ll then pay only 90 percent of an average account.”

The e-mod is driven by safety in the workplace and is based on payroll. Those with fewer than expected accidents for that industry/payroll will have a lower e-mod. The number of accidents is more important than the severity of the accidents, says Bradley. “If two companies each have a $100,000 payroll and the first company has seven accidents, none costing more than $5,000, and the other company has one accident totaling $1 million, the latter company will have the lower e-mod. Because the rates assume that bad things are going to happen from time to time in the workplace, but when you have a frequency of claims, the assumption is going to be one of those claims is going to be a bad one at some point.”

At BearWise Landscapers, our agency has a strong history of dealing with workers’ compensation insurance. We even have a sister company that is a third party workers compensation claims administrator and has full time nurses and adjusters on staff. We would like the opportunity to discuss workers’ compensation insurance with your landscaping business and look for ways to reduce costs in the long run through a strong safety program that will reduce your experience rating modifier. We also have access to rich dividend plans and other ways to immediately cut your workers comp premium. If you would like to speak with one of our agents regarding workers compensation questions or if you are simply looking for comparative insurance quotes, please do not hesitate to contact us or complete our online insurance questionnaire.

The Agent Articles section of BearWiseLandscapers.com allows our insurance agents to provide practical information for landscapers. These agents can also obtain quotes and establish a custom insurance program for your landscaping business through our access to a variety of insurance carriers. This agent article is filed under 4 Workers' Compensation, and you can follow comments to it through the RSS 2.0 feed. Feel free to leave your own response below: