Small Businesses Need to Watch Out for These Workers Compensation Mistakes

Don’t make these common mistakes with your workers compensation insurance.

Workers compensation insurance is one of the only legally mandated forms of business insurance in Detroit, Michigan.  Unfortunately, many small business owners are not familiar with this type of coverage, and they often make costly mistakes.  To ensure that you aren’t violating your state’s insurance laws or overpaying for your coverage, watch out for these common workers compensation insurance issues.

  • Code Misclassifications

When you secure workers compensation insurance, you need to classify your employees and your type of business.  Failing to apply the correct classification codes can result in you securing insufficient coverage or overpaying for your insurance.  Unfortunately, with over 700 codes to choose from, misclassification is far more common than you might think.  If the code classification process confuses you, then you should work with an experienced workers compensation advisor to ensure that you aren’t doing your employees or business a disservice.

  • Inconsistent Payroll Reporting

Your workers compensation insurance premiums are partially based on your company’s payroll information.  Unfortunately, many businesses fail to update their payroll regularly.  This can conceal the hiring or release of employees, making it impossible for your insurance provider to adjust your coverage and premiums accordingly.  Staying up to date with your payroll reporting will ensure that you have adequate workers compensation coverage to address your risks.

  • Failing to Verify Contractor Coverage

If your business relies on contractors for certain aspects of your business’s operations, then you need to verify their proof of workers compensation insurance before hiring them.  Failing to secure proof of insurance leaves you at risk because your company must assume responsibility for any non-covered contractors.

  • Delayed Claim Reporting

When business owners wait too long to report workers compensation claims, it makes it difficult for a claims adjuster to get an accurate bearing on how the situation unfolded. This can result in a denial of coverage. Even if your insurer agrees to cover the claim, they may raise your premiums because your late reporting will be perceived as a lack of responsibility on your part.

Make sure your small business isn’t guilty of these common workers compensation insurance mistakes. Do you need help with your workers comp or other forms of business insurance in Detroit, Michigan?  If so, then contact the experts at CIA Insurance and Risk Management.  We are ready to assist you with all your commercial coverage needs today.

Post written by Sophia Najjar, Vice President | Commercial Risk Management (CRM)

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