Workers’ compensation insurance offers vital protection for your employees. Should a member of your staff be injured or fall sick while on the job, this insurance will cover sick pay, medical costs, and even retraining, if it is needed? It also protects your company, as employees who make use of these benefits typically surrender their right to sue for negligence. Despite the many advantages of this insurance, traditional-style workers’ comp plans can be very expensive to maintain.
The Downsides of Traditional Lump-Sum Payments
Premiums for workers’ comp policies are usually paid annually as a lump sum. This can significantly impact the cash flow of businesses not able to keep larger amounts of cash in reserve. Moreover, the annual lump-sum payments are estimates of your liability in relation to your projected payroll. This often leads to over- or under-paying.
The Benefits of Pay-As-You-Go
A benefit of pay-as-you-go plans is that they eliminate both of these problems. You make a payment each time you run your payroll. Insurance costs are thus spread over the year, freeing up cash that can be used for other purposes. Additionally, the payments are accurate as they reflect your liability in relation to your actual payroll, as opposed to projected estimates.
Most organizations would benefit from making use of pay-as-you-go plans. However, these policies are particularly advantageous for companies with a highly fluctuating payroll. An expert in professional liability insurance can assist you in choosing the right type of policy for your business.