Materials Handling Contractor Planning Tool — Control Insurance Costs
Soft tissue injuries are expensive, with major immediate and long-term impacts to businesses and their employees.
The cost to a contractor of just one injury can be significant. Consider the following example and then ask your insurance broker what one claim could mean for your business* (1):
Your Starting Point:
- Base premium = $160,000
- Claim free experience modification rate = 66%
- Workers’ compensation premium = $105,600
After one injury claim of $50,000 in direct costs (workers’ compensation payments, medical expenses, etc.), your:
- Experience modification rate increases by 15 points
- Insurance premium increases by $24,000 to $129,600 a year (or $72,000 for the 3 years the higher modification rate is in effect)
- Indirect costs (wages not covered by Workers’ Comp, accident investigation, training replacement workers, etc.) may reach an estimated $55,000
- Total cost of the claim = $127,000 ($72,000 + $55,000)
What does that added cost mean for your bottom line? If you have a 10% profit margin, you will need to generate an additional $1,270,000 in business to cover the cost of this injury. [If you have a lower profit margin, you’ll need more new business to offset the added cost.]
The figures in this example are for illustrative purposes only. The costs associated with a soft tissue injury will vary.
Remember — “Experience modifications are based on your last four years of experience, excluding the current year. For example, if you renew on January 1, 2014, the experience from January 1, 2010, thru December 31, 2012, will be used in the calculation.” (2)