Effective January 1, 2012, Florida workers’ compensation policies will use new rates for businesses in the landscaping industry. For the second consecutive year, the new rates are higher for landscapers, tree trimmers, and lawn care companies. If your business is experiencing higher insurance premiums, contact the insurance professionals at BearWise Landscapers for comparative quotes and cost saving measures.

Businesses in the landscaping industry primarily use the following classification codes to compute the workers comp premium associated with the payroll of their employees. The new rates are listed with each classification code.

9102 Class Code (Rate: 4.11) - This classification code is assigned to employees that maintain lawns and gardens. This is your standard landscape maintenance and lawn care classification and it is used by most businesses in the landscaping industry to rate their workers’ compensation premiums. It is officially titled ‘Parks NOC’ and the 2011 rate for it was 3.47 percent. This new rate results in an 18% premium increase over that 2011 rate.

0042 Class Code (Rate: 7.48) - This classification is applied to employees that are involved in the installation of landscapes. These landscaping operations involve laying sod, planting trees, shrubs, and flowers, and general gardening activities. This classification cannot be used in Florida with employees classified as 9102 unless the operations are conducted by separate work crews. The rate in 2011 was 7.14 and this link provides information on using class codes 0042 and 9102 on the same policy.

0106 Class Code (Rate: 16.11) - This classification code is used for tree trimmers and specifically it is used for those employees or businesses whose operations involve leaving the ground to trim trees. When ladders, bucket trucks, and any other equipment assists employees to get their feet off the ground to prune or trim trees, then this classification is applied instead of the previous landscaping class codes. It also includes the chipping and cleanup activities associated with tree trimming. The 2011 rate was 14.62 percent.

5183 Class Code (Rate: 5.31) - This classification code is applied to employees of landscaping businesses that engage in the installation or repair of underground lawn sprinkler systems. The rate in 2011 was 4.82 percent.

0005 Class Code (Rate: 4.99) - This classification is applied to employees that operate a landscape nursery, and the 2011 rate was 4.60 percent.

8810 Class Code (Rate: 0.27) - 8810 is applied to the clerical office employees of landscaping businesses that do not engage in landscape services. The 2011 rate for this class code was 0.25 percent.

8742 Class Code (Rate: 0.53) - This classification is used for salespeople employed by landscape companies. These employees also may not engage in landscape services to be rated in this lower classification. The 2011 rate was 0.49 percent.

The workers’ compensation rates will be applied to all new and renewal policies that are issued January 1st, 2012 and later. The previous rates will be used on current policies until a renewal policy is issued. The National Council on Compensation Insurance (NCCI) is the ratemaking organization that files workers’ compensation rates for all carriers in Florida.

For more information regarding workers’ compensation insurance or the other unique insurance needs of businesses in the landscaping industry, please contact BearWise Landscapers. There are many other factors that impact the final workers’ compensation premium of a business, such as claims history (experience modification factor), dividend plans, deductibles, limits of insurance, and others. If your landscaping business is interested in receiving comparative insurance quotes on your workers comp renewal or other insurance products, please call Drew Roberts, CPCU, ARM at 866-296-2327 or complete our short online quote request form.

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.

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.

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 0042 – Applies 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 9102 – Applies 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.

I came across these great safety tips on Zenith’s website for businesses in the landscaping industry:

• Grass Trimmers and Brush Cutters
• Grinders and Chippers
• Hand Tools
• Let Your Tools Keep You Safe
• Personal Protective Equipment
• Power Lawn Mowers
• Powered Trimmers
• Prevent Back and Other Lifting Injuries
• Refueling Equipment
• Riding Mowers: Landscaping
• Safety Increases Production
• Shoveling and Digging

For more information about workplace safety, please visit the Groundskeeping Safety section of their website.

When discussing workers’ compensation insurance with landscaping businesses, I often emphasis the importance of taking a long term approach to controlling premium costs by lowering the cost of claims. I typically recommend partnering with an insurance carrier that is committed to controlling the cost of claims and providing resources to your business that help you prevent workplace injuries. I believe Zenith Insurance Company (www.theZenith.com) is an industry leader in this approach.

Since 1977, Zenith Insurance Company has been a specialist in workers’ compensation insurance. They write coverage in 45 states and the District of Columbia. Zenith conducts business through independent agencies, like BearWise Landscapers. Zenith Insurance Company currently has an A.M. Best rating of A (Excellent). For the latest rating, access www.ambest.com.

They are experts at managing the claims process, getting injured workers back to work, and fighting fraud and abuse whether it relates to providers of medical goods and services or to individuals making false claims. Because of this extensive experience, Zenith leads the way in helping businesses with higher than average experience modifications. Their staff works together with your landscaping business to help reduce workplace injuries and improve their bottom line.
Here are a few of the valuable services provided to Zenith clients:

• Workplace Safety & Health
• Managing Claim Costs
• Quality Medical Care
• Returning Employees to Work
• Fighting Fraud & Abuse
• Providing Claims Legal Services
• Premium Audit Services
• Education & Training

Today, we issued a press release with the 2010 Florida Workers Compensation Rates. We are also sending out the following letter to Florida landscapers:

I would like to wish you a Happy New Year! As we prepare for 2010, I wanted to share some good news about the new Florida workers’ compensation rates. An average rate reduction of 6.8% from the 2009 workers comp rates will be effective on January 1st. This is the seventh annual drop in rates since 2003, when reforms were passed. Since that time, the average rate decrease is 63%.

This news is even better for businesses in the landscaping industry:

Lawn Maintenance Employees (Class Code 9102) - The new rate is 3.49 dollars for every 100 dollars of remuneration. This is a 16.9% reduction from the 2009 rate of 4.20 dollars. This classification has a 71% decrease since the 2003 rate.

Landscape Installation Employees (Class Code 0042) – The new rate is 6.36 dollars. This amounts to a 10.5% reduction, which is also larger than the state average.

Irrigation Employees (Class Code 5183) – New rate is 4.75 dollars for a 7.5% reduction.

Tree Trimming Employees (Class Code 0106) – The new rate is 13.31 dollars, which is actually 2.7% higher than the 2009 rate of 12.95 dollars. Even with this change, this classification has still received a 67% reduction since the 2003 rate.

These new rates will be applied to your policy at renewal. If you have any questions about workers’ compensation insurance, or if you would like to receive comparative quotes, then please do not hesitate to contact us. At BearWise Landscapers, we focus on the unique insurance needs of the landscaping industry and look forward to continually providing practical information and other valuable insurance services to your business.

At BearWise Landscapers, our goal is to provide practical and in-depth insurance information to landscaping businesses. We believe that by providing services above and beyond the typical insurance agency, that we will earn the trust of landscapers and will establish our insurance program as the expert in the landscaping industry. We believe this approach is the best way to conduct business.

This approach has received the attention of other insurance agencies and we were mentioned in this November article by Insurance News & Views, a weekly publication delivered to independent insurance agencies by the Independent Insurance Agents and Brokers Association. The article, written by Veronica DeVore, described how even though more “personal lines insurance customers [are turning] to the Internet for their insurance needs, small business owners clearly prefer working directly with an agent to purchase workers’ compensation coverage.” Here is a quote that mentions our service of providing information to your landscaping business over this website and specific workers’ compensation information on another website:

While this personal touch is clearly valued among commercial insureds, EMPLOYERS has identified a gradual shift in how customers plan to service and perhaps even purchase policies in the future. The survey reports that the Internet’s role in workers’ compensation purchases will increase from 11% to 17% in the next 12 months, and many respondents plan to go online for information and quotes at their next renewal.

“Agents have to earn their role (as an advisor) by delivering more and more value,” says Welch. “They can do so with Internet sites of their own to help the insured obtain information.”

One agency has done just that by creating a separate Web site only for workers’ compensation needs. Drew Roberts, an account executive at Black Bear Insurance Agency in Longwood, Fla., says that while agents are still at the heart of selling workers’ compensation coverage at his agency, the Web site simplifies the process by answering customer questions in detail and by allowing quotes to be submitted electronically. Roberts adds that busy small business owners like to be able to read about coverage and complete quote forms “at midnight” if they want to, and he and his fellow agents like the time they save by directing customers to the Web site when questions arise. The agency plans to add a blog section to address even more customer concerns in an online format.

“It’s a way for us to provide general information and an introduction (to workers’ compensation coverage),” Roberts says. “We don’t have to answer questions multiple times and we can answer them more thoroughly by using the Web site.”

Our hope is that you continue to find this website informative and practical for your business insurance needs. If you have any insurance related issues for your landscaping business that are not addressed on this website, please contact me with them. I look forward to continually providing a quality insurance service to the landscape industry and appreciate the opportunity that you give us to do that.

Thank you!

Many landscapers view insurance as a ‘necessary evil’ and do not understand the advantages they receive when purchasing a required insurance policy such as workers’ compensation. Workers’ compensation is a great example because it is mandated by state governments, and landscaping businesses with employees are required by law to provide the benefits listed in their state statutes for injuries in the workplace. To see the significance of this coverage, please take a stroll with me back into history.

After the American Civil War ended in 1865, the Industrial Revolution made its way from Europe to the United States. Factories were built and many new industries emerged as others made technological improvements. The garment industry in New York and the surrounding areas brought attention to the plight of the injured worker. The conditions were particularly tough and the industry demanded high production. Through the turn of the century, the legal profession in the United States was also growing and the injured workers gained the right to sue the employer.

The judicial systems became backlogged with all of the cases, preventing judges from dealing with other suits and making the entire system inefficient. In the midst of this chaos, the injured workers began to prevail in the rulings and employers lost machinery, buildings, and other property. By 1908, the workers were winning in nearly 15% of all cases and common law developed the concept that industry is responsible for the costs of injuries inherent in industrial occupations.

At the urging of President Theodore Roosevelt, the first “workmen’s” compensation law was passed by Congress to cover certain employees of the Federal Government. Amidst the lawsuits, employers began lobbying with state legislatures to pass similar laws, and in 1911, ten states enacted the controversial law. It was clear that the growing success of litigation was felt by the business community.

The business owners requested that the workers’ compensation laws included what is known as the “great trade-off”. The employer would agree to provide medical benefits and some wage replacement benefits to the injured workers if they would waive their right to sue the employer. Many states passed the laws in order to attract businesses, especially those in the manufacturing industry. By 1949, all the states had at least some form of workers’ compensation insurance in effect.

Today, workers’ compensation has become the exclusive remedy for the injured worker, regardless of fault in the injury. It protects employers from damage suits filed by injured workers and also provides employers with a basis for calculating production costs. It is still administered on a state-by-state basis and landscaping business must abide by the requirements within the states that they operate. As you pay your next premium bill for workers’ compensation insurance, I urge you to keep in mind how this form of insurance developed and the concept of the “great trade-off”.

As business owners, you are often approached with advertisements and salespeople that state you can save 15% or more on your insurance premium from this company or that company. Some of these companies may actually have better rates and would save premium dollars for your business, but other companies will simply cut coverage to lower the premium. It is important to understand the coverage offered by different insurance quotes and how insurance premium is calculated.

Insurance premiums are usually computed using a predetermined rate that is multiplied by either your payroll or revenue totals for the policy term and then adjusted based on your business characteristics. For example, workers’ compensation insurance in Florida has rates predetermined by the state government and all insurance carriers in the state use those rates by multiplying it by your payroll in the appropriate classifications. Here is a link to an article with the 2009 rates for Florida landscaping businesses.

The insurance premiums for general liability policies are based either on your projected payroll or your projected revenues. This rating basis is then multiplied by a rate determined by the insurance carrier. When comparing premiums on these policies, you can look at the specific rate or make sure that both insurance carriers use the same payroll or revenue figures.

Equipment floater insurance typically has separate rates for the value of equipment that is individually scheduled on the policy and the value of unscheduled equipment that is protected under the blanket equipment coverage. As is the case for the other insurance policies, these individual rates should be listed on the ‘declarations page’ of the policy documents.

As a landscaping business, if you ever have questions regarding insurance rates and total premiums, please feel free to ask an insurance agent at BearWise Landscapers. We would also welcome the opportunity to walk through comparative insurance quotes received by your business to analyze differences in coverages and actual rates. Let us know how we can be of assistance to your business insurance needs!