Archive for February, 2010

Standard Discounts in Workers Comp

February 25th, 2010
by Drew Roberts, CPCU, ARM | No Comments »

Understanding Discounts

Understanding Discounts

Many lawn care and landscaping businesses have asked us about a standard premium discount that our insurance carriers apply to their workers’ compensation policies. In the premium summary section of the policy documents, this discount will show up for insureds that pay over 5,000 dollars a year for workers comp insurance. It will be marked as a percentage and that percentage will change as your payroll changes. This is a standard discount in Florida and is used regardless of the insurance carrier on guaranteed cost policies (not retrospective rating policies). It can be used with dividends and other discounts. Here is how this standard discount is computed:

The standard discount is tiered. There is not a discount on the first 5,000 dollars of premium and the discount is applied to only the premium above that amount. Below is a chart with the current discount percentages applied to each level of premium.

Standard Premium Discount
Discount by Insurance Carrier Type
Premium From: Stock Co. Non-Stock Co.
First $5,000 0% 0%
$5,000 - $100,0000 10.9% 3.5%
$100,0000 - $500,000 12.6% 5.0%
Over $500,0000 14.4% 7.0%

The principle behind applying a premium discount to larger workers’ compensation policies is that expenses of handling compensation on a risk are proportionately less, as a percentage of premium, as the risk becomes larger. Typically, agency commissions are also reduced on larger policies. These discounts only apply in the state of Florida and although other states may use a similar formula, please check with the workers’ compensation insurance division of your home state.

If you have any questions regarding premium discounts for your lawn care, landscaping, or tree trimming business, please do not hesitate to contact me or one of the other insruance agents at BearWise Landscapers. If you would like a comparative quote on your workers’ compensation policy, you may request it by calling our office or completing our online quote request form.

Reducing Workers Comp Costs

February 19th, 2010
by Drew Roberts, CPCU, ARM | No Comments »

PRO Magazine - February 2010

PRO Magazine - February 2010

NOTE: This article about reducing the costs of workers’ compensation insurance was published in the February issue of PRO Magazine.

Lower Your Workers’ Comp Costs
Tips for Landscapers to Reduce Workers’ Compensation Premiums

For landscapers all over the United States, the premium of workers’ compensation insurance is a large expense that’s often required by state laws. In other words, there’s not much you can do about it. Or is there?

Understand Your State’s Laws

Not every state requires businesses to provide workers’ comp. In fact, most states only require businesses to provide it when they have more than three employees.

Even when not required by law, offering workers’ comp is still beneficial for landscapers to avoid prosecution from injured employees who waive their rights to file damage lawsuits against the employer when receiving workers’ comp benefits.

The premium for workers’ compensation insurance is designed to provide sufficient funds to not only pay for benefits to the injured employees, but also to operate the system that delivers those benefits. It is a pre-funded insurance system, which means that premiums are determined before the policies are issued, and that premiums are intended to meet all future claim payments made under those policies.

Nearly 40 states have designated a non-profit statistical organization called the National Council on Compensation Insurance (NCCI) to advise their insurance regulators on the appropriate premium rates. Insurance carriers within those states are required to use the state-mandated rates, along with the roughly 600 different classifications for employees.

For landscapers dealing with workers’ compensation insurance in one of these 40 states, not to mention many of the remaining states, I recommend the following five steps to avoid overpayment.

Use Correct Employee Classifications

Each of the 600 classification codes for employees has a specific rate. Ask your insurance agent for copies of the official descriptions for those used in your policy—and verify that they are correctly assigned.

Many states allow a business to use multiple classification codes; your employees who fulfill clerical duties will have a substantially lower rate than those out on jobsites. For landscapers, most states use code 0042 for landscape installation duties and the code 9102 for lawn maintenance duties. It is common for lawn maintenance employees to pay a double rate when misclassified in the installation code.

Use Correct Payroll Numbers

The rates on workers’ compensation policies are multiplied by the premium basis, which is commonly referred to as payroll, but the correct term is actually “remuneration”. There is an important difference between these terms because remuneration excludes some pay received by employees; this needs to be removed from the premium basis on your policy.

Severance pay is not included along with overtime wages above the regular amount of pay.

Corporate officers can be excluded from coverage, and their payroll should also be completely removed. If not excluded, partners and sole proprietors often have a fixed amount of payroll and other executive officers will have a maximum amount. Find out the specifics in your state laws.

Be Proactive with Claims

The best long-term approach to saving on workers’ compensation premiums is to minimize the number of employee injuries, along with the costs associated with each injury.

Most states utilize an experience rating technique that allows premiums to be adjusted higher or lower based on claims history. To take advantage of these systems and lower future premiums, it is important to partner with an insurance carrier that efficiently handles claims and controls claim costs.

Report claims immediately to your carrier to minimize the employee’s time off work. Offer light-duty jobs to injured employees to minimize their loss of wages. Use techniques to prevent injuries—and make safety a priority for your business operations.

Obtain Available Premium Credits

In some states, there are discounts of 5% and greater for having a drug-free workplace. There are also standard discounts available for utilizing a written safety program.

In states without these standard discounts, many use “schedule rating”, which allows an underwriter to apply premium discounts for factors such as safety practices and management experience that are not otherwise reflected in the claims experience. Find out what credits are available in your state and seek to obtain the associated premium discounts.

Analyze Other Premium Discounts

To allow insurance carriers to compete on price when rates are pre-determined, many states allow specific forms of premium discounts based on claims.

Landscapers with larger premiums may be offered dividend plans, which allow funds as high as 50% of the premium to be returned at the expiration of their policies for no employee injuries or good claims results.

Retrospective rating plans allow businesses to receive discounts for lower claims, but claims within a policy period can adjust the premium amounts and result in higher premiums. It is important to ask questions and understand what premium discount options are available to your landscaping business.

Landscaping Links

February 15th, 2010
by Drew Roberts, CPCU, ARM | No Comments »

I have enjoyed the opportunity to provide services to the landscaping industry. Through conferences, writing articles for magazines, communicating in online forums, and other events, I have met many businesses that are in the industry or that also provide services to this great group of businesses. I wanted to provide a page on this website to add links to their websites. I am going to add more pages for businesses located in Florida, but on this page, I simply wanted to list a few websites of businesses that are located outside of Florida. I will continue to update this article with new links, so feel free to check back.

Here are some links to landscaping businesses outside of the state of Florida:

Here are some links to services for the landscaping industry:

If you have a business that fits into these link categories, feel free to contact us with some information about your business and website link. Simply mention in the contact form that you are interested in being included in this section and I will review your site and services and add you to our list. I look forward to running into all of you at upcoming events for the landscaping industry.

Landscaping Insurance Questions

February 9th, 2010
by Drew Roberts, CPCU, ARM | No Comments »

Insurance Questions

Insurance Questions

Do you have a question about insurance for your landscape installation, lawn care, tree trimming, or other landscaping related business?

If so, we want to encourage you to ask our agents those questions through the contact form on our website. Take a few seconds to type out your questions and we will make it a point to answer those questions on this agent articles section of our website.

We want to be a resource for landscaping businesses throughout the United States even though we currently only provide insurance to those located in Florida. So feel free to ask us your questions regardless of where you are and we’ll do what we can to answer them.

Uses of Class Codes 0042 and 9102

February 4th, 2010
by Drew Roberts, CPCU, ARM | No Comments »

Employee Classifications

What class code for landscaping employees?

Workers’ compensation insurance in Florida and roughly 40 other states, use a classification code system designed by the National Council on Compensation Insurance (NCCI) to rate insurance premiums differently for groups of employees. There are roughly 600 class codes, and the two main codes used for employees in the landscaping industry are 0042 and 9102.

I often encounter landscape maintenance businesses that have their employees misclassified and are able to not only receive a 50% reduction on their current insurance premiums, but are also able to file for reimbursements from overpayments on previous workers compensation policies. In January, we provided workers compensation coverage under class code 9102 to three lawn care businesses that were classified under code 0042.

These experiences and multiple other questions about how these classification codes may be used together on a policy, have brought to my attention a need to communicate specific information to the landscaping industry about the uses of workers compensation codes 0042 and 9102.

First, let’s start with a brief description of each classification code with quotes from NCCI’s official descriptions:

Class Code 0042Applies to employees primarily engaged in planning, clearing, grading, laying of sod, seeding, and planting necessary for landscape installation operations. Planting of trees, shrubs, and flowers are classified to this code along with general gardening activities.

Class Code 9102Applies to employees that perform maintenance of lawns, grounds, and gardens. “The maintenance may involve lawn mowing, raking, application of liquid or granular fertilizer, spraying and trimming of shrubs or small trees from the ground, and thatching or aerating. If any one or all of the above operations are performed by a lawn maintenance risk classified to Code 9102, then minor and incidental landscaping operations performed by the same risk, such as the replacement of dead shrubs, the planting of a few flowers, and the placing of rock or brick as edging designs are included under Code 9102. This minor landscaping operation is distinguished from work performed by an insured at a job or location where the primary work at the job or location is landscaping. Since lawn spraying is a maintenance operation, a risk engaged exclusively in work of this nature is classified to Code 9102.”

In Florida, the 2010 rates for theses class codes are 6.36 for code 0042 and 3.49 for code 9102. In the other states, class code 0042 also has a significantly higher rating than class code 9102. For businesses in the landscaping industry, this emphasizes the importance of distinguishing between the two classification codes.

In many states, employees that engage in both landscape installation and landscape maintenance activities can have their corresponding payroll divided between the class codes if proper records are maintained. Consult with your insurance agent for the specific classification rules in your local state. According to the state exception wording under the 9102 class code, Florida landscaping businesses can use class code 0042 and 9102 on their workers’ compensation policy only if those “operations described by these classifications are conducted by separate crews.”

For more information regarding these classification codes and their appropriate uses to classify your landscaping employees, please contact our office. For insurance quotes on Florida landscaping businesses, please complete our easy online quote request form.

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