You may have heard stories about employers fighting workers’ compensation claims. You may have even experienced it firsthand.
Some employers fight claims because they fear the idea of premiums increasing. While claims can affect costs, the changes are typically not as drastic or permanent as employers expect.
How much does workers’ comp insurance cost?
As explained by the California Department of Insurance, there are many things that go into calculating premium costs. This can make the exact reason for cost increases and the potential amount of those increases confusing for your employer. Some of the elements of the cost could include:
- Your classification as a worker
- Your employer’s industry
- The total payroll cost
- The injury history for employees at your company
This is far from a simple system. Furthermore, some employers might view workers’ comp as a necessary evil and therefore find the cheapest option possible, doing as little as possible to learn about how it works. This could lead to misunderstandings and conflicts.
When do premiums increase?
The injury history — the history of claims and losses — could definitely increase the amount your employer pays for insurance. That means that your workers’ comp claims could increase your company’s premiums.
This factor is called “experience modification” in the insurance industry. Your employer’s premium costs would be multiplied by a ratio that represents increased or decreased risk. Companies with no claims might pay lower than the industry average, while companies with many could pay more. However, as mentioned above, there are many other factors that go into the cost.
The first step towards getting your employer to stop fighting your claim would probably be helping them understand the system as much as possible during your negotiations. There are many things they might not know. For example, in addition to increasing premium prices, many insurance companies also work directly with their high-claim clients in order to increase safety.