Pay as You Go Workers Compensation Insurance can help businesses save on premium and prevent gaps in coverage
Pay as You Go Workers Compensation Insurance is a way for seasonal and cash strapped businesses to pay Workers Compensation Insurance Premium in real time. With a Pay as You Go Policy, the premium is based upon the previous months actual payroll. A traditional workers compensation insurance policy bases the monthly premium on an average of the previous year or the previous few years payroll numbers. Depending upon the age of your business or the industry the business operates within, this number can be dramatically different from year to year. The differences get ironed out during the post term audit and the result is either a credit to the business or additional premium owed. Either way this adds an unexpected aspect to the businesses costs. A Pay as You Go Workers Compensation Insurance Policy eliminates this uncertainty by allowing the business to pay their premium each month based on the accurate, real time revenue numbers of the business. Here are five different businesses that could benefit from this type of insurance policy.
Commercial Cleaning
A Commercial Cleaning Company can benefit from a pay as you go workers compensation policy because of the uneven payroll from year to year. Depending upon the health of the economy, businesses may change their service from year to year. As the economy goes, more businesses decide to move cleaning in house or cut back on the frequency of cleaning. When the economy is better, more businesses decide to take on the services of commercial cleaning businesses. Because of all these differences, payroll can be dramatically different from year to year. With a traditional Workers Comp Policy, monthly premium is determined by the average payroll over the course of the past 3 periods. An audit is conducted at the end of the term to determine if there is a refund or if more premium is owed. Pay as You Go allows the business to pay premium in real time based upon the previous months payroll. This prevents cash flow from being tied up in premium unnecessarily and it can prevent a business from having a surprise at the end of the term where it owes additional premium.
Bed and Breakfast
A Bed and Breakfast Business in most areas of the country is extremely seasonal. If the business is located near a ski resort, the busy season is predominantly in the Winter Months. If the Bed and Breakfast is located near a lake, the business takes place predominantly in the Summer Months. No matter the location of the business, there are more than likely times of year when the business is busy and other times of the year when business is slow. A Pay as You Go Workers Compensation Insurance Policy will allow the business to pay more for the insurance premium during the months of the year when there is more business and likely more cash flow. This type of policy will also let the business pay less for premium during the months when business is slow.
Retail
A Retail Store can benefit from a Pay as You Go Workers Compensation Policy for many of the same reasons as a Bed and Breakfast and a Commercial Cleaning Company. Business can be drastically different throughout the year and from year to year. Because a Pay as You Go Policy allows businesses to pay premium in real time, the business can budget much more effectively. This also allows the retail business to free up cash that can be used on much more immediate business needs.
Landscaping
A business that operates within the Lawncare and Landscaping industry is heavily dependent upon the weather. When heavy rainfall causes your business to be closed for extended amounts of time, this can effect payroll dramatically. It also can impact revenue. Both of these factor in to what a business pays for workers compensation premium. The ability to pay premium based upon the previous months actual payroll numbers increases the accuracy of insurance premium.
Food Trucks
In recent years, Food Trucks have become a booming business. Some run year round. Depending upon where the business is located, they are only able to be up and operating a certain part of the year. When this occurs, it means the business may have to go extended periods of time with little to no revenue coming in. With a traditional workers comp policy, this can be difficult to plan for. If a food truck business goes with a Pay as You Go Workers Compensation Policy, it allows the business to pay more premium during the busier months when there is more cash on hand, and pay less during the leaner months.