Pay-as-you-go workers’ compensation insurance is an increasing popular alternative to paying for your workers’ compensation insurance. Eliminating up-front down payments or deposits and outdated payment methods are two of the biggest reasons businesses of all sizes are turning to pay-as-you-go for workers’ compensation insurance.
Compared to estimating your annual payroll amounts by job descriptions, pay-as-you go relies on your real-time payroll information to calculate workers’ comp premiums, resulting in more accurate premium payments throughout the year. This means that you’ll have less of a chance to pay too much or too little during your policy term. Typically, businesses underestimate their payrolls, which results in often large and unplanned additional audit premiums due at the end of the policy term (right at the time your next year’s deposit is due) which can cause a cash flow crunch.
To simplify, pay-as-you-go workers’ compensation is an alternative way of avoiding the deposit and making your premium payments based on your actual payroll data that’s collected every time you run payroll. How is this done? Insurance carriers have recognized that if they receive your payroll data and premiums based on your actual payroll data on a regular basis, your premiums are more accurate and therefore they have waived their typical deposit requirements.
How does your payroll data and premiums get to the insurance company? I’m glad you asked. E-COMP has built a custom and secure “insuretech” platform with over 450 payroll companies, payroll software companies along with our nationally recognized insurance company partners. This allows our customers a simple and easy way to purchase, monitor and pay for workers’ compensation insurance.
Pay-as-you-go is not a different type of insurance, and it doesn’t replace your workers’ compensation insurance or your responsibility to pay premiums, collect/issue certificates of insurance from subcontractors, etc. Your coverage must still be provided through a state-approved workers’ compensation insurance carriers or an approved self-insured source.
To learn how E-COMP can help your company eliminate your deposit, reduce your audit exposure and simplify the purchasing process, start your quote now or give one of our E-COMP Specialists a call.
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