Backstage

Insurance...

Today rant was inspired by a conversation I had with someone last week... (hey, nobody said I'd be timely in my posts...)

Insurance is an important part of any business... Realistically, you can't have a business without certian kinds of it around here at any rate... There's Liability, Worker's Comp, Fire, Theft, Veihicle, Etc... Some of it is easy to get, some more difficult, but in the end you can get what you need... There's a problem with it though... It all costs money right?... Sure, I know, it has to cost money, or the insurance company wouldn't pay you when you needed it too... Really, I don't have any problem with that... My problem (this time) is with only one of the types of insurance... Worker's Comp...

Now, I work in a semi dangerous field... There are lots of tools, electrical systems, heavy overhead objects, rough weather conditions, and less than ideal facilities, budgets, and time restraints... So to say people get hurt should not suprise anyone... Honestly, I have always been suprised that more people don't get hurt... Therefor, worker's comp insurance is really important to both the employee, and the employer... Again, I am both as I own, and also work for other people.... Personally I have never (thankfully) personally needed worker's comp, but I am always glad its there... So when I opened my company, we made damn sure we got the worker's comp... 

The amount of money you pay for workers comp is based on a few things...

• your yearly payroll
  
• the type of work you do
  
• the number of injuries, or injury free years you have had

That seems reasonable really right?... So here's how mine breaks down in very general terms... we fall into 3 catagories of type of work... 1) office clerical (incase I slice off my hand with a sheet of paper) which is the cheapest, something like $0.05 / $100 of payroll, 2) carpenter, shop - which covers my people when they are working in my shop, 3) carpenter, other - which covers my crew when they are outside the shop on an event.  (there is also a catagory for driver, truck on my policy, but since my partner or I do all the driveing, we've never used that in the fee calculation)  The latter two catagories, and far more expensive... If memory serves, they are in the $0.30 - $0.38 range... (I really haven't looked at the actual numbers in months since we re-newed it, so I may be off on those amounts...) Naturally, the majority of my payroll is split between the two carpenter catagories since I do pretty much all the paid office work...  So the grand total is lets say $7,000.00 for the year... Now, as we are technically a new company, insurance companies don't want to give you a policy... So what NJ did was to take all new companies, and simply assign them to insurance companies... That certianlly makes it easy to get the policy... Here's the catch though... For the first two years, you can not change to another insurance company, and you have to pay the entire amount when you sign the policy... There's no quarterly payment... 100% up front...

Now, I don't know about other small business owners, but I can tell you that we didn't have $7,000 to just toss to the insurance company...  I mean, come on... We were at the time pouring money into setting up our facility, as well as needing operating capital since we didn't have an established credit history anyplace yet... $7,000 spread over a year would have been annoying, but certianlly not like getting mugged in a dark alley like they did to us... Now, fortunatly, my understanding is that this will change after two years... (that'd be March) 

Full payment upfront is not, however, what set me off about the insurance... Get this... We got a bill a couple months ago from the insurance company... I recognise the worker's comp company since its different than our other insurance carrier... I'm thinking, wait a second, I paid this bums for the year already... Open the bill and find something that claims I owe them something like another $500.00 for "previous accident, reinjury surcharge" (that may not be worded exactly the same, but its close)... I'm thinking, wait a second, we haven't had any injuries at all, who re-injured themselves?... So I sic my partner on them... (he's much better dealing with these people than I am... I'd get us dropped from the policy for sure) Well he chats with them a few times, and then calls the state, and then a few other business people he knows, and finally tells me we're screwed and have to pay this... It is apparently, a state-wide fee... Someone please explain this one to me please... Why am I paying for someone that has been re-injured when we are injury free, and then tell me why that surcharge is supposedly going to the state, since as far as I know, the insurance companies have to pay for that re-injury, and the state has nothing to do with it... Is NJ simply trying to help with the budget issues they're having?... Possibly... I didn't dig any further than telling my partner about it and let him run with it from there... He's a pit-bull about money, so I know he talked to whoever he needed to to verify this...

I understand why so many companies break insurance laws regarding workers comp... Its a damn shame I can't bring myself to work the same way financially... I just couldn't sleep at night...  

Posted by Backstage at November 17, 2003 06:37 PM