Saving Money on Workers Compensation Insurance

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Red glove worker holding workers compensation sign.

Avoiding the cost of workers compensation insurance is nearly impossible in America because it is required by most states in the USA. Workers compensation was designed to prevent companies from having to make big payouts when a major accident happened to an employee or employees. This insurance scheme was seen as a way to save companies money.

However, the rising cost of wage replacement and medical bills has made workers compensation insurance an expensive proposition. Hospital and pharmaceutical rates have made covering medical expenses a financially taunting situation. In certain sectors, especially the construction industry, wages and insurance premiums have also skyrocketed the costs of workers comp.

The construction industry pays its workers about three times the minimum wage, so replacing a salary is that much more expensive. Besides that, the premiums for workers compensation is computed based on risk. A roofer has a much more riskier job than a retail salesperson. That difference in risks translates into higher insurance costs. Workers comp for a roofer can cost over $7.00 per $100 while a retail person’s workers comp can cost as little as .71 cents per $100. The differences in wages and premiums as well as the rising costs of medical make it imperative that monetary outlays for workers comp be reduced.


One way to reduce the cost of workers compensation insurance premiums is by reducing the amount of accidents happening in the workplace. There are training programs designed by OSHA to reduce accidents on the job. The training can consist of proper use of equipment, which include ladders, scaffolding, mechanical and electrical equipment; orientation to site hazards and use of protective gear such as: body harnesses, safety glasses, boots and hard hats.

Substance-free Workplace

Some accidents occur because the worker has been using substances such as drugs or alcohol. Eliminating these incidents fueled by substance abuse can lower your workers compensation insurance rates. The way to have a substance-free workplace consists of taking a few steps. Explain that if they are caught drinking or using drugs at work, it can cost them their jobs. Be alert to the physical signs that someone is drinking or drugging. Have regular, unannounced drug tests.

Proper Job Classifications

Proper job classifications are a way that small businesses can reduce their insurance costs. Job classifications identify completely and correctly the tasks that a worker has to do on a specific job. If a secretary is injured lifting a heavy box, that could cost more in damages if that has not been defined as part of her regular duties. Likewise, a warehouse worker injured lifting a heavy box would not be able to file for legal damages because lifting heavy objects is part of their job description.


Your agent is also a salesman that wants your business. He or she is someone that you have put a great deal of trust in. If your agent has not been honest with you, the basis of your relationship can disintegrate. Most agents are honest with you because it’s not in their best interest to be otherwise. When you can tell if an agent has been dishonest, it is when you file a claim. Then what you have been told about your coverage won’t line up with the reality that you face when you file the claim.

Four Steps

If small businesses take 4 steps: Join a group, Enact a safety program, Create a substance-free workplace and Use proper job classifications; they can help reduce their workers compensation insurance costs. Besides that, all these steps are free and doable.

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