All landscaping businesses in New Hampshire that have employees are required to carry workers compensation insurance by law. Worker's compensation coverage isn’t cheap though, and it can account for a good portion of your overall landscaping insurance budget. The following is an explanation of why worker's compensation premiums are often higher for landscaping businesses.
Why Does My New Hampshire Landscaping Business Pay So Much for Workers Comp?
Understanding worker's comp class codes:
It is not difficult to understand that the likelihood of an injury (and hence a work comp claim) is more likely in certain professions. As worker’s compensation covers employees while injured on the job, the more dangerous the work, the greater chance for a claim, the more costly the insurance.
For example, a roofer is more likely to be injured on the job than a librarian. Each of these professions, and more than 700 more, are classified by the National Council on Compensation Insurance (NCCI) that describe each occupation's level of risk, and the impact on what is charged for worker's compensation insurance.
Insurers use two different classifications for landscaping employees:
Class Code 0042 is for employees that are engaged in general gardening, landscape planning, clearing, laying sod, seeding, grading, and planting.
Class Code 9102 is for employees that are engaged in lawn, garden, or ground maintenance (e.g., mowing, edging, raking, applying fertilizer, etc.).
Your business may have some employees, such as office staff, that fall under different class codes. Each class code correlates to a specific multiplier that’s based on the risk faced by employees within the class. As the classification of employees is used to determine how much to charge for worker's compensation insurance, it is vital to get the classifications accurate.
Correct Employee Mis-classifications to Pay Correct Premiums
If your landscaping insurance policy's worker's compensation premiums are high, the first thing to do is to make sure your employees are correctly classified. Specifically, you don’t want employees misclassified into riskier classes than necessary.
An insurance agency, like HPM Insurance, which specializes in workers' compensation and landscaping insurance, can help check your employees’ classification codes to make sure they’re correct. If any are incorrect based on an employee’s activity and job description, the agent can also help correct the mistake.
The Size of Your Staff and It's Impact on NH Worker's Comp Rates:
Most landscapers need employees. As a leading factor in calculating work comp premium is payroll, the higher the payroll, the higher the premium. This makes sense because a part of worker's comp covers lost wages should an employee become injured or ill on the job. If you have a well-paid employee with a severe work-place injury, the claim would be higher based on the compensation alone.
What if You Don't Know What Your Payroll Will Be When Buying a Work Comp Policy?
Most businesses won't know exactly what their income and hence payroll will be in the future, so it is estimated when you buy a work comp policy. Though it may be tempting to low-ball the estimate, it is encouraged that you be as accurate as possible as NH insurance laws allow for payroll audits by work comp carriers.
If you estimated too low, you would be charged at the end of the policy term the difference. This can be a problem because the premium is typically due within 30 days. If you estimated accurately at the beginning of the policy term, you could have paid your premium on a monthly installment.
Can Running a Safe Landscaping Business Save Me Money?
Yes! Your company's claims history is a significant factor in what you pay in work comp premium in the same vein as you wouldn't expect your car insurance premium to stay the same if you kept having accidents.
In the worker's comp world, all businesses have an experience modification factor (aka an experience mod). If you don't have any claims over several years, your experience mod should be less than 1.0. If your landscaping business has a claims history, your number will be higher than 1.0.
The experience mod directly translates to a credit or surcharge as this number will be multiplied, along with your class code and payroll per $100.
If you’ve seen a recent jump in your business’ workers' compensation premiums, a new claim could be why (although it’s not the only possible reason).
Mitigate Risk to Save on Workers Compensation
The other way to manage worker's compensation premiums is to reduce the risk of a job-related injury. You can lower your employees’ chances of getting hurt by:
Properly maintaining all equipment
Issuing standard safety gear (e.g., gloves and goggles)
Providing employee safety training
These actions can help reduce incidents and claims, which might help keep your workers' compensation premiums lower.
Work with a New Hampshire Agent
If you need help with your landscaping business’ worker's comp coverage, contact the independent insurance agents at HPM Insurance. Our agents have worked with many New Hampshire landscaping companies and can assist your business with checking classification codes, comparing rates, or any other relevant matter.