How to NOT Fail a Workers’ Comp Audit and Ace It Instead
Audits are a necessary part of your workers’ compensation policy. Your premium is only an estimate of what you owe and is based on the projected payroll for the coming year. Once the actual payroll is determined, your premium is adjusted; you either end up paying extra or you receive a partial refund from your insurance carrier. The audit is what determines this result.
The purpose of the audit is to establish whether your coverage accurately reflects your risks. As part of the process, your insurer checks to make sure your employees are properly classified, and that your rates are accurate.
If the information you provide to your insurance carrier is not correct, your policy will not provide the proper coverage. So when the incorrect information is checked, you will fail the audit.
What constitutes insurance fraud?
It is very much in your interest to provide the right information and cooperate with the audit. You may know of some business operators who have fudged information and were prosecuted for insurance fraud. Others may have failed to provide updated information or refused to allow their insurers to visit their facilities, which are breaches of their insurance contracts and allow the insurers to cancel or not renew policies.
Other no-nos include underreporting payroll, providing incorrect job descriptions, and employing contractors who don’t have workers comp.
If you have subcontractors be prepared to show workers comp certificates of insurance for all of your subcontractors.
Acing the audit
For the best results, always provide up-to-date, accurate information to your insurance carrier. Maintain open communication for a successful partnership that provides the appropriate coverage for your employees.
Be a Responsible Computer User: Back Up Your Data
It’s happened to all of us: perhaps you’ve been working on a project for weeks and suddenly it’s evaporated. Or you’ve returned from a trip with a thousand photos, and they’ve all disappeared.
Whether you’ve lost data when your hard drive quit, a virus invaded, a file became corrupt, or a thief stole your computer, you need that data, and now it’s gone. Worst of all, its loss could have been avoided…if only you’d backed up!
In its article “How to Back Up Data,” wikiHow.com warns: “Unfortunately, computers fail, and often. Having a backup plan set before anything goes wrong is one of the most important tasks you will undertake as a responsible computer user.”
It’s not that difficult these days. According to Michael Darmanin’s article “Never Lose Data Again: Easily Back Up Your Files with These Simple Tips” in RISMedia.com, “Saving your data or backing up to the cloud is a great way to prevent data loss and much easier and cheaper than most people realize. In fact, if you’re currently using a Gmail or Microsoft email account you already have access to free online storage.”
Microsoft offers OneDrive for data backup, and Google provides Google Drive. Wikihow.com lists five alternative ways of backing up. There’s software you can buy, and storage services that cost a little and save a lot. External hard drives still work well for many of us.
Perhaps BullGuard.com says it best: “The bottom line is that if you value what’s kept on your computer, it’s wise to take steps to protect your information from sudden loss.” So stop typing and back up!
‘Your Earnings Will Always Be in Line with Your Mindset’
Still small? Start thinking big.
The idea’s not original, Google it and you get more than 7 million results, but that doesn’t mean it can’t change your business…and your life.
As Anne Bachrach noted in a recent LinkedIn post, “Whether or not you realize it, your earnings will always be in line with your mindset.”
It makes sense; when you can’t look beyond your role as a “small-business owner,” you’ll miss opportunities to grow. And you’ll be so busy with daily operations you won’t have time for “blue-sky thinking” about the important things, such as your brand and your customers.
In an article in Urbanicity, Hamilton, Ontario-based retailer Lauren Ricottone explained her “aha” moment: “I functioned in a ‘small’ business mindset for a long time, and it crippled my capacity and my ability to experience real growth.”
She felt like many entrepreneurs do: “I don’t need to bother with that – we’re still too small.”
Ricottone, however, was familiar with the systems and practices of big business. She knew they had value in the corporate environment, but didn’t see them applying to her own small business.
But she took a risk: “Running a business is a massive load of work. Either we carry it around, or our systems carry it on our behalf.”
Ricottone implemented systems for inventory control, tracking sales, accounting, and more. “My new growth strategy? Functioning as if my small business was already a big business.” It worked; Ricottone’s small business is flourishing. Comments Bachrach, “You will certainly not get what you deserve when you think small….Thinking big is about realizing your potential and getting what you deserve instead of limiting yourself.”
The 12 Policies Small-Business Owners Need
Small-business owners must be bold, innovative, business savvy, and…protective. Owners bravely put themselves out there in a world of business that involves many risks. Surrounded by potential financial damage, business owners must have the proper insurance coverage in place to protect themselves and their company. Following are the 12 essentials:
Liability insurance: If your business is sued by someone claiming that your company caused them harm, this policy covers damages, including attorney fees and medical bills. Several liability policies offer coverage for more specific circumstances, such as:
Errors and omissions insurance (E&O)/professional liability insurance, which covers liability for recommendations, advice, product design, or physical care. E&O will cover your business if a customer claims you have failed to perform your job properly and, as a result, the customer was harmed in some way.
Employment practices liability insurance (EPLI) pays damages if you are liable for violating an employee’s rights. It covers legal fees as well as judgments against you.
Directors and officers liability insurance (D&O) protects company leaders from lawsuits claiming their management of the business violated the rights of others.
Business identity theft insurance: If your business suffers from data theft, this policy covers your legal liabilities. It also provides coverage for costs associated with notifying customers and recovering compromised customer information.
Commercial vehicle insurance: If you use any vehicles for your business, this policy covers damage to the vehicle as well as costs to third parties due to injury or damage caused by your vehicle.
Personal auto insurance: In addition to your business vehicles, you likely have an automobile of your own. You’ll also need proper coverage for this vehicle. If it’s used at all for business, check with your insurance agent to see what coverage is best for you.
Workers’ compensation insurance: This pays for medical care and lost wages when an employee is injured on the job. It’s required if your company has more than three to five employees, depending on the state you do business in.
Property insurance: If your business includes a building and/or equipment, this policy protects against theft, fire, vandalism, and other damages. It may include business interruption insurance, which covers your earnings if your business temporarily can’t operate.
Life insurance: Do you have loved ones who rely on your business income? This policy pays your beneficiaries upon your death, giving you peace of mind that they’ll be taken care of.
Terrorism insurance: Other policies may or may not provide terrorism coverage. Some situations require an additional policy to obtain the appropriate amount of coverage needed.
Business owner’s policy (BOP) is a packaged policy that covers many of the previously listed items. This coverage is tailored to fit the insurance needs of your business. Often, business owners can save money by bundling their services in this package. Contact your insurance agent to develop the best BOP for your company.
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