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Workers Compensation Shop.com write direct bill workmans
compensation insurance for employers and agents. 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:
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Premium: |
$10,000.00 |
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Expense
Constant: |
$200.00 |
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State
Surcharge/Tax: |
$30.00 |
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25% Deposit: |
$2,730.00 |
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Remaining 6
Installments: |
$1,250.00 |
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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.
2nd 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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