It’s important for contractors in the construction industry to understand the factors that go into calculating their workers’ compensation insurance costs.
If you’ve worked on a large construction project, you’re likely well aware of how essential a workers’ compensation insurance policy is to protect your workers and, in some cases, the company itself.
These policies are particularly important within our labor-intensive industry, where the risk of workplace injury is significantly more pronounced:
While major injuries can be incredibly costly, especially in cases where litigation occurs, even a minor workplace injury can create significant financial burdens and logistical challenges for you, your employees, and the company at large. That’s why having a workers’ compensation insurance policy is an essential–albeit expensive–aspect of any successful jobsite.
The amount your company must pay for workers’ compensation is a custom rate based on every $100 of your business’ payroll. To determine your premium, the insurance company will take the following into account:
While The National Council on Compensation Insurance (NCCI) determines the classification codes and MOD rate in most states, each state maintains its own regulations and penalties around workers’ compensation. Most states do enforce stricter requirements for businesses in the construction industry.
Again, this varies from state to state. In New York, for example, failure to secure coverage for five or fewer employees within a one-year period is considered a misdemeanor, and the offending company could be fined between $1,000-$5,000. For companies with more than five employees, the offense is upgraded to a felony, and the corresponding fine is increased to $5,000-$50,000. Failure to maintain accurate records around your payroll, including number of employees, classifications, wages, and incidents, is also considered a criminal offense.
The best way to reduce your company’s workers’ comp costs is to avoid costly insurance claims which can raise your future premiums. Stakeholders in the construction industry have a few options for reducing the risk of injury on their job sites:
Odin is making construction safer with the power of data. Our construction software platform and proprietary technology can improve safety and reduce risk on your site in a number of ways, including:
While workers’ compensation insurance is one of the more expensive costs of doing business in the construction industry, understanding how these costs are calculated can help you make smart decisions that will benefit your bottom line in the long run. Finding smart ways to ensure safe practices on your job sites today will prevent accidents, reduce claims, and minimize your costs in the years to come.
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