The questions and answers below are some commonly asked questions. If you have a question not listed here, feel free to email us and we'll be happy to reply. We may even add it to the FAQ page!
Once a year insurance companies review commercial casualty insurance policy exposures to make sure they are accurate.
Costs for labor are almost always needed - Payroll records and costs of subcontractors are typical.
Payroll details are very important and can have a big effect on final premium - things like overtime, what jobs employees were doing, what states people worked in are very important.
There is also an extensive list of inclusions and exclusions published by the NCCI that define exactly how to measure workers compensation exposures.
1-One should always send copies of the state unemployment reports filed each quarter. These forms have all employee details needed and are a convenient way to send the information to the insurance company.
2-Payroll details for certain employees is essential to accurately calculate the final policy actual amounts.
There is a classification of the policy that describes the business which is known as the governing classification and most employees are grouped into this classification.Certain employees such as office, salespeople, and drivers have special classifications called Standard Exceptions that must be separated from the governing classification employees and providing the payroll details for these employees allows the insurance company to separate employees into their proper classifications.
Subtracting the Standard exception employees payroll from the gross payroll leaves the payroll for all the Governing classification employees. This same process can be used for overtime and other adjustments.
Companies are required by the state to prove to the government authorities that they have consistent procedures in place to measure how premiums are calculated and ensure all policyholders are treated fairly.
It could potentially be a crime to report inaccurate information- see this interesting article from the Insurance Journal www.insurancejournal.com
a. Wages or salaries including retroactive wages or salaries;
b.Total cash received by employees for commissions and draws against commissions;
c. Bonuses including stock bonus plans. (Refer to Rule V-F.5 .)
d.Extra pay for overtime work except as provided in Rule V-E
e. Pay for holidays, vacations, or periods of sickness. (Refer to Rule IV-E.2.d. for allocation of payroll for employees subject to more than one classification code.)
f.Payment by an employer of amounts otherwise required by law to be paid by employees to statutory insurance or pension plans, such as the Federal Social Security Act
g.Payment to employees on any basis other than time worked, such as piecework, profit sharing, or incentive plans
h.Payment or allowance for hand tools or power tools used by hand provided by employees either directly or through a third party and used in their work or operations for the insured
i.The rental value of an apartment or a house provided for an employee based on comparable accommodations
j.The value of lodging, other than an apartment or house, received by employees as part of their pay, to the extent shown in the insured's records
k.The value of meals received by employees as part of their pay to the extent shown in the insured's records
l.The value of store certificates, merchandise, credits or any other substitute for money received by employees as part of their pay (refer to Exclusions below for certain fringe benefits [substitutes for money] not considered to be remuneration)
m.Payments for salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125) that are made through employee-authorized salary reduction from the employee's gross pay
n.Davis-Bacon wages or wages from a similar prevailing wage law
p.Expense reimbursements to employees to the extent that an employer's records do not substantiate that the expense was incurred as a valid business expense
q. Note: When it can be verified that the employee was away from home overnight on the business of the employer, but the employer did not maintain verifiable receipts for incurred expenses, a reasonable expense allowance, limited to a maximum of $30 for each such day, will be permitted.
q.Payment for filming of commercials excluding subsequent residuals that are earned by the commercial's participant(s) each time the commercial appears in print or is broadcast
The first and most important rule in insurance is be fair to all policyholders - to not discriminate.
Companies must make sure all policyholders have their exposures measured in the same way and accurately so no one pays more than is fair.
When you wrote your policy you needed coverage from the first day of operations so that is when your policy began.
You can change these dates if desired by working with your agent.Your actual information is entered into the insurance company computers and replaces estimated information used to issue your policy.
This information is used for the expired policies and often for the current active policies as well. Information from the audit is used to calculate accurate premiums based on real numbers rather than estimates. The information is also reported to rating bureaus and is combined with other companies' data from your industry to calculate the proper rates and experience modification figures.
The insurance company will contact the policyholder, stating dates of coverage and information that needs to be provided.
The policyholder must then assemble the records, do the analysis, provide to the insurance company, and be available to answer any questions that may arise.
Some companies may send an auditor to see you, which requires you and your records be available during the auditor's visit.
Yes you can. In fact many times the insurance company will ask you to prepare and send the information to them.
Inclusions and exclusions are defined by the National Council on Compensation Insurance, which also administers the other rules and regulations for workers compensation insurance. Commonly excluded items include overtime, severance pay, and 3rd party payments including tips.
a.Tips and other gratuities received by employees;
b.Payments by an employer:(1)to group insurance or group pension plans for employees, other than payments covered by Rule V-B.2.f. and Rule V-B.2.m; and(2)into third-party pension trusts for the Davis-Bacon Act or a similar prevailing wage law, provided the pension trust is qualified under IRC Sections 401(a) and 501(a);
c.The value of special rewards for individual invention or discovery;
d.Dismissal or severance payments except for time worked or accrued vacation;
e.Payments for active military duty;
f.Employee discounts on goods purchased from the employee's employer;
g.Expense reimbursements to employees to the extent that an employer's records substantiate that the expense was incurred as a valid business expense;Note: Reimbursed expenses and flat expense allowances, except for hand or power tools, paid to employees may be excluded from the audit, provided that all three of the following conditions are met:(1)The reimbursed expenses or expenses for which allowances were paid were incurred upon the business of the employer, and(2)the amount of each employee's expense payments or allowances is shown separately in the records of the employer, and(3)the amount of each expense reimbursement or allowance payment approximates the actual expenses incurred by the employee in the conduct of his or her work.
h.Supper money for late work;
i.Work uniform allowances;
j.Sick pay paid to an employee by a third party such as an insured's group insurance carrier that is paying disability income benefits to a disabled employee;
k.Employer-provided perquisites (perks) such as:(1)Use of an automobile;(2)An airplane flight;(3)An incentive vacation (e.g., contest winner);(4)A discount on property or services;(5)Club memberships;(6)Tickets to entertainment events.
l.Employer contributions to salary reduction, employee savings plans, retirement, or cafeteria plans (IRC 125)--Contributions made by the employer, at the employer's expense, that are determined by the amount contributed by the employee.
Note : Payroll means remuneration.