25 Jan Pay as you go Workers Compensation Insurance: Why Wouldn’t an Employer Prefer it?

A new type of insurance product has been designed that has the potential to make life easier for business owners. Pay as you go workers compensation insurance is exactly what its name implies: insurance protection for employees with premiums based on current payroll.

Many owners of small businesses have been gratified by the development of this alternative workers’ compensation insurance product. Traditional workers’ compensation insurance premiums, based on forecasts of annual payroll, cause a number of difficulties for business owners. Estimates of annual payroll made many months in advance are bound to be inaccurate, and the accounts of workers’ compensation insurance policyholders are subject to annual scrutiny by state auditors to check on compliance with regulations. Employers who have miscalculated or apparently misrepresented their payroll forecasts can face heavy fines.

A further criticism that has been leveled at traditional workers’ compensation insurance arrangements is the requirement to pay annual premiums in advance. Any business that has to keep a tight rein on cash flow can find this requirement problematic. Disruption of business cash flow can have serious implications for the health and future of a small business that is struggling for survival.

Pay as you go workers compensation insurance
does not require the business owner to forecast future payroll, make upfront premium payments, or submit to audits of accounts. Because workers’ compensation insurance is closely regulated by the states premium rates are no different from those for traditional workers’ compensation coverage. It’s no surprise that this alternative insurance product has found favor with small business owners across the country.

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