How Small Business Owners Can Lower Their Workers Comp Premiums

The value of workers’ insurance coverage to businesses is irreplaceable. Most startups have few employers and heavily rely on the owner for the day-to-day operations. Without dedicated risk managers, it can be challenging for small business owners to figure out how to lower their insurance premiums.

While workers’ comp provides small businesses with essential support and protection in the event of a workplace injury, higher premiums are a significant expense for a growing organization. Reducing workers’ compensation premiums can save you funds to direct to other sectors.

Here are some steps a small business owner can take to reduce their insurance premiums.

What Are Workers’ Compensations Premiums?

Your worker’s compensation premiums are the cost of your workers’ compensation. You must first understand how workers’ compensation insurance premiums work to lower your premiums.

Your premiums’ value depends on experience modification rate, class codes, and total payroll. A classification code is used to identify your business type to estimate the cost of your workers’ compensation rate. Your modification rate, EMR, is a figure that represents how well or poorly your business compares to businesses under a similar employee classification code.

Your EMR determines the cost of your premiums. When your modification rate is below one, your small business has demonstrated a good history of claims that will lower your premiums’ base rate. The more claims your business reports, the higher your EMR and premium rates will be.

The following measures will help lower your workers’ insurance premiums.

Conduct A Risk Assessment

Reducing premiums will require you to create sustainable safety practices, but you must assess which risks must be addressed to take precautions efficiently. A risk assessment will identify any potential hazards that are putting your workplace and workers in danger.

It will allow you to take up measures to limit possible problems as much as possible – this will make your workspace safer for employees and help you bargain lower premiums with your provider.

Sustainable Safety Practices And Training

As a small business owner, it’s tempting to consider implementing safety practices as a time-consuming and heavy expense. However, the result of lacking these measures could cost your business. Sustainable safety practices lower workers’ compensation premiums and attract high-quality employees who shop for employers who value their safety.


Here are some standard sustainable safety practices:

  • Eliminate potential hazards
  • Substitute hazards that you cannot eliminate with less dangerous things.
  • Implement engineering controls to isolate employees from hazards. For instance, you can get a machine guard that prevents the operator’s hands from getting caught.
  • Implement administration controls like personal hygiene practices, training, operating procedures, and policies.

While addressing risks is essential, training your employees is crucial. Combined safety measures and proper training of employees can make all the difference between fatalities and some bruises. Ensure your employees are trained on all the following, among other things:

  • Safety and health procedures, policies, and their goals
  • Functions of your safety programs
  • Contact procedure for questions and concerns regarding the program
  • System for reporting hazards, illnesses, close calls, and injuries.
  • How to react in case of a safety emergency

Record your safety training procedures to demonstrate your efforts to your insurer when seeking lowered insurance premiums for your small business.

Act Fast After Injury


Your claim-reaction timeline after workplace accidents significantly affects your claim and future premiums. How you react within this timeline procedure and the steps taken can help reduce your future premium due to a proven record of effective emergency response.

Seek medical attention for your injured employee immediately, then report the claim to your workers’ compensation insurance provider within twenty fours of the incident. Conduct your own post-accident investigations and communicate your return to work program to the affected.

Delayed reporting will increase your claim costs and future premiums. Delayed treatment may also worsen a situation that could have been treated quickly and with lowered costs. Timely medical attention and reports prevent extra costs that complicate an incident.

Post-accident investigation helps identify the cause of injury and mitigate future hazards from the same issue. Demonstration of corrective actions after a hazard has occurred lowers premiums by showing the lower risk of future injuries.

Return-to-work programs help promote the readmission of victims of workplace injuries. When an employee sustains an injury and receives workers’ compensation benefits at home, several factors may demotivate them from resuming work.

For instance, an employee may also suffer trauma from the injury, lowering their willingness to resume. Create programs to help and motivate affected employees to resume work. A proper return-to-work program shows your preparedness to prevent excessive compensation and pull workers back.

Classify Your Employees Correctly


Sometimes, your insurance premiums are high because of improper classification of employees. Employees are assigned different classification codes based on the kind of labor they engage in. These are standard codes set by the National Council on Compensation Insurance, and all of them are state specific.

If your premiums are still high after taking all precautionary measures, you can conduct an audit to review your employee classification codes. Conduct the audit annually to ensure accuracy as the structure of your small business continues to change. The audits can significantly lower your premiums.

For instance, you should re-assign their classification code if an employee moves jobs from the factory to the offices. The new code is less costly due to the change of responsibilities to a lower-risk field.

Check that your codes match your state’s standards, as different geographical locations affect the risk involved in performing various duties.

Small Business Owners Can Lower Their Insurance Premiums

Financial consciousness is at the core of any business, especially small businesses. Small establishments want to save as much of their expenses and spend more on expansion to increase their profit margins.

Workers’ compensation insurance is an essential financial shield, but costly premiums can impair your ability to afford good insurance coverage. Taking the above steps will lower your premiums and improve your ability to protect your employees physically and financially. Make these changes to lower your premiums.