Your Payroll’s Impact on Workers’ Compensation Insurance
July 1, 2019
Accidents happen. And when they happen in the workplace, it’s vital to have workers’ comp insurance in place to protect your employees and your business. Regardless of size of your company, insurance is one of the most standard costs of doing business – especially workers’ comp. However, the cost of paying for this coverage isn’t always the same. There are four main factors insurers consider when estimating your premium for workers’ comp insurance, including location, type of work, claims history, and most importantly, payroll.
Payroll’s Role in Calculating Premiums
The size of your workforce and its payroll has direct correlation on the premiums your business will pay for workers’ comp insurance.
Each year you are asked to provide your insurer an estimate of your payroll for the coming year. It is important to get this number as accurate as you can to calculate correct premiums and coverage. Otherwise you run the risk of getting a large surprise bill at year-end for underestimating your payroll.
Keep in mind there are additional payroll components beyond just wages and salaries that need to be considered. Outlined below are a few aspects, among many others, of your employees’ payroll that will also affect your workers’ comp insurance costs:
• Commissions and draws against commissions
• Overtime pay
• Holiday, vacation and sick pay
• Annuity plans
• Expense reimbursement to employees where employer records do not indicate a valid business expense
• Payment, compensation or allowance for tools used in work
• Payment for the employees’ part of Social Security and Medicare
• Value of store certificates, credits or merchandise, or other many substitutes received as part of pay
A complete listing of all payroll elements affecting premiums can be made available to you through the National Council on Compensation Insurance (NCCI).
Here at DM Payroll Services, we stand ready to help you accurately estimate your payroll year-after-year and provide reporting to keep your workers’ comp coverage up-to-date. Better yet, we can even help you get the right coverage. We team up with our affiliate Doeren Mayhew Insurance Group to provide our clients with the opportunity to get the coverage they need at the best cost.
If you’re interested in having a payroll system that helps you take the guess work out of your workers’ comp estimates or getting a quote on workers’ comp insurance from Doeren Mayhew Insurance Group — contact us today!