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Frequently Asked Questions
How long does a work comp claim effect my experience mod?
An experience mod is calculated by a formula which compares your company's loss experience to the expected losses of other companies in you class code. The losses in the last year can still be open so the formula does not include the first year prior and takes into account the three years prior to the first year in the calculation. There are several important steps you can take to reduce your mod including modified duty return to work, employee training and safety incentive programs, . Please discuss with your agent.
What is an experience mod for work comp?
An experience mod is a percentage multiplied by the manual premium that can either lower or increase the work comp premium. The percentage is calculated by comparing the work comp losses of your company compared to the losses of other companies in your class code. A one mod means that your claims were the same as expected for your industry. Mods typically range from .70 to 1.6 based on claims history however they can be higher. The formula gives more weight to frequency of claims than severity.
Why is it important to get an employee back to work on at least a modified duty program after a work comp claim?
Medical only claims can be reduced by 70% in the calculation of a mod if the employee returns to work within 7 days.
What are work comp dividends?
Work comp rates are set by the state of Florida and are not negotiable. Some work comp companies will offer a dividend which is a percent return of premium based on claims experience at the end of the policy term. Some dividends are a fixed percentage and some are a sliding scale based on actual loss experience.
What is the pay as you go option with work comp?
Some work comp companies will offer pay as you go as a payment option to work comp. The traditional payment plan is to estimate payroll at the beginning of the policy period and calculate the premium based on this estimate. At the end of the year, the actual payroll will be calculated and the adjusted premium will be calculated based the actual payroll in the form of an audit. If the payroll was overestimated then premium will be refunded, if the payrolls were underestimated then the work comp company will refund the additional premium. With pay as you go, the actual payroll is reported each month and payment is made based on the calculated premium based on actual payroll.
What credits are available for Work Comp?
A safety credit is 2% and a drug free credit is 5%. Please discuss with your agent.
What is the criteria that effects pricing for commercial property in Florida?
Commercial property in Florida has become more challenging in FL over the last 8 years. The main criteria an insurance company will use for pricing commercial property in Florida is age of building, construction type (frame, noncombustible, joisted masonry, masonry noncombustible, etc.), location, claims history, distance from fire department, condition of building, age of roof and type of operation.
What is business income?
Business income is loss of time element of coverage. This coverage will pay net income plus continuing normal operating expenses incurred including payroll in the event of a covered property loss that results in a necessary "suspension" of operations. This is a valuable coverage that can pay your business for an extended period of time when you are not able to operate your business. Please discuss this valuable coverage with your agent.
What are the best ways to lower my commercial auto premium?
One of the best ways to lower your commercial auto premium is to work with your agent and insurance company to institute a driver program that reduces claims. An excellent claims history with safe drivers will get you the best companies with the best rates by applying experience rating to your policy. Important elements of a good driving policy are restricting or excluding personal use of company vehicles, employee incentives for safe driving, no cell phones while driving, no eating while driving, maintenance checklist for vehicles, and reviewing driving records at hiring and on an annual basis.
What is uninsured motorist coverage?
UM coverage pays you, the insured, for medical when another driver is at fault in an accident and they do not have insurance or do not have adequate limits. Liability pays a 3rd party for bodily injury or property damage while UM pays the insured. Please discuss this valuable coverage with your agent.
As a contractor, should I cover rented equipment under my inland marine policy or should I take the physical damage coverage offered by the equipment rental company?
Most insurance companies will offer blanket rental coverage as part of your inland marine insurance. Covering rented equipment on your own policy is typically the best option. The equipment rental company will charge 5 -10 % of the rented amount for physical damage to the equipment. The coverage form is written by the rental company and while it sometime is can be good coverage it can also have many gaps in coverage and the form needs to be read carefully. Blanket rental coverage with your own policy is usually less expensive and better coverage. The premium is based on annual rental receipts and limits.
How is a general liability premium calculated?
General Liability is commonly calculated using a rate per 1,000 of either payroll, square footage or sales depending on the industry class code. Number of employees can also be used for certain industries like auto garages. The rate an insurance company uses varies depending on what rates they have filed with the State of Florida and how much credit the underwriter applies to the rate based on underwriting criteria including prior claims history, experience, and operation of business. Unlike work comp, the general liability rate is not set by the State of Florida and varies between insurance companies.
Is pollution and watercraft liability excluded on the standard ISO form general liability policy?
Yes. Depending on your industry, it is important to look into a separate pollution and watercraft liability policy if you have this exposure.
How much insurance does my business need?
This decision needs to be made by the business owner based on their risk tolerance. Most companies should carry at least $1,000,000 combined limit liability for commercial auto with uninsured motorist coverage, $1,000,000 occurrence / $2,000,000 aggregate limit for general liability and work comp for a company with 4 or more employees. Work comp is required for 1 or more employees in the construction industry. There are many more important coverages depending on your industry including, inland marine and professional liability. Please talk to your agent to discuss many more important coverages available to fit your individual business needs.
What is the difference between an admitted insurance company and a nonadmitted insurance company in the State of Florida?
An admitted company uses filed ISO forms for the policy coverage. The coverage is standardized and is typically considered more comprehensive. The pricing is also typically better. Nonadmitted companies are typically used for harder to place risks and the forms are not filed with the state. It is important to read the policy thoroughly with a nonadmitted company because there can be more variance in coverage. The pricing is usually more expensive, the coverage is not as comprehensive and additional excess and surplus lines taxes are included in the premium.
What are loss runs?
Loss runs are used by most insurance companies when underwriting a business. Loss runs are a summary of all claims printed on a standardized from produced by the insurance company. Most insurance companies want to see hard copy loss runs for the last 3 to 5 years if coverage was in effect. A clean loss history will typically result in a lower premium.
What criteria should I use when searching for a commercial insurance agent?
If I was looking for an insurance agent for my business I would look for someone who I can trust and have an excellent relationship with, someone who is responsive, available when I need him and cares about my business , an agent who has an excellent relationship with his carriers, and agent who has a proven track record and excellent references from businesses he insures i.e. a referral and someone who has taken the time to educate himself about the commercial insurance industry and specifically has one of the following designations- CIC, ARM or CPCU.
