What do you pay in Workman's comp insurance premiums?

I have a very small shop. Most of our work is assembly rather than machining (My one, very old CNC is what brings me here as a perpetual lurker).

I have a couple of assemblers. Their salary ranges between $6.50 and $8.00 and hour. My total salary paid during 2004 (the first year that I hired help) was $26,800.

At the beginning of the year I paid $1,800 in estimated Workman's comp insurance for the year. At year end, Traveler's insurance does an audit and as a result, they sent me a bill for $4,000. In other words, the total annual premium was $5,800 on salaries of $26,800.

I don't know anything about the insurance industry and frankly I don't want to have to spend my time learning it and arguing with them. I just want to pay a reasonable amount for insurance and get back to work.

That number sounded high to me so I hired a consultant who's sole job in life is disputing workman's comp insurance premiums - perhaps that should say something about the veracity of the industry right there.

Anyhow, I paid the consultant $450 and, as a result of his dispute, Travelers reduced the premium by $800. Essentially reducing the annual premium to $5,000.

I've never made a worker's comp claim on this, or any other, policy.

Does this number sound right to you guys? Do you expect to pay 20% of your salary dollars toward workman's comp insurance?

Thanks for any insight.

snipped-for-privacy@sagecompanies.com.REMOVE.THIS.TO.REPLY

what state are you in?

blind screaming guess, be careful what you call your workers, keep the machining away from the assembly.

DO you have a state board you can appeal to?

i haven't done comp in a few years, but as a straight up machine shop in Mass, Circa 1998, I paid 1800 for 60+k in salary so it sounds out of line for you, but insurance is a crazy business

Have any of your workers ever made a comp claim?

George wrote:

Illinois

Yep. Of course we're so small that as a practical matter it is hard to keep the two areas separated by more than a few feet. Though in truth, none of the assemblers run any machines.

I don't know. But thanks for asking that question. I now know that there may be such a thing as a state board to whom I could appeal. I didn't know that 5 minutes ago.

No.

Thanks for your reply, George.

Snipped

George, That sounds VERY high, even by California standards. I would look real hard at what SIC the employees were in first off, and I'd shop around. I'm surprised that the "consultant" didn't do more.

Well, ever been to an ins companys building? Wonder how they can pay for all that? Well now you know. In TX a lot have dropped out of that, but you are on the hook. In TX some just hire Illegal's, work for $4.00 an hr or cheaper, like who they goina call ?

George, In addition to what others have said here, try these:

Each job in your facility is classified by the insurance company according to the risk associated with the job -

If you have a secretary in the office, four people assembling your widgets and one machinist, the insurance company will classify _all_ of them as whatever job has the highest premium... unless you do some proactive management:

You need to segregate your payroll into these work classes so you have verifiable records of how much payroll was spent on each type of work, and work with your insurance carrier to get the appropriate rate for each category. Call the insurance company and ask for the 'pure premium rate' for each job - or get a hold of the company's rating information and select the job classes that most accurately describe the work done at your facility.

We pay about 35 cents per $100 of payroll for office workers, about $3.50 for assemblers and one of the owners does all the machine work so is exempt from workman's comp. The same employee can work in different classes, and you account for payroll based on the wages earned in each class...

There are several workers comp carriers, so I'd shop around - but get your payroll sorted out first so you know your actual numbers in each job classification. Our comp cost last year was about $900 on a $40K payroll...

Carla