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Workers Compensation Shop.com » Workers Comp Programs » Direct Bill Workers Comp

Direct Bill Workers Comp

Direct Bill Workers Compensation coverage is perfect for smaller premiums and consistent wages.

Questions? Call 888.611.7467 for a Workers Compensation Shop Specialist

Direct Bill Workers Compensation

Workers Compensation Shop.com writes direct bill workmans compensation insurance for employers.  This type of coverage is the standard retail workers compensation most employers are used to purchasing.

Direct Bill refers to the way an insurance policy is billed.  It indicates that the policy holder will be billed directly by the insurance carrier once a workers comp policy is bound and the deposit premium is typically collected by the agent or billed by the insurance company.  Direct Bill work comp is the most traditional way in which most consumers purchase work comp insurance.

Traditionally, insurance companies have required a deposit of 15% to 25% down to start a policy.  Then they bill the remaining premium balance over 6 to 9 installments.  The down side of this method is twofold:  1) it can require a more significant amount of cash in order to start (bind) a policy and 2) the installments are almost always made during the first 4 to 9 months which may create cash flow issues since most operations earn revenue throughout the entire year.

Keep in mind that traditional Direct Bill work comp is based on estimated payroll and subject to an annual year-end audit.  If your actual payroll ends up higher than your estimated payroll, you will more than likely owe additional premium as a result of the audit.

Here is an example based on a $10,000 insurance policy:

Expense Constant:

Flat dollar amount that is added to the Pure Premium for an insured risk. This dollar amount is kept by the insurance carrier as profit and serves the purpose of covering the cost of issuing and servicing an insurance policy.

2^nd Injury Funds:

State fund surcharges are designed to protect employers from the higher cost of insurance that can occur when an injury combines with a prior disability to result in substantially increased medical or disability costs than the accident alone would have produced. These funds are designed to ensure that an employer is not made to suffer a greater monetary loss or increased insurance costs because they hire or retain an employee who has a disability.  They also help ensure payment of workers' compensation benefits to injured employees whose employers have failed to comply with the coverage provisions of the Workers'

Direct Bill work comp is an idea situation for small businesses who have a low premium, predictable payroll, and good cash flow.  Payrolls that fluctuate or create larger premiums are better served by self monthly reporting or pay as you go work comp programs.

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