Pay-as-you-go Workers Compensation

Get business insurance with optimized coverage to meet your exact needs

Prefer to speak with a CoverWallet consultant? Call (646) 844-9933 anytime.

Having Workers Compensation insurance for your business is not only great to gain peace of mind for your organization, but it is also typically required by law. Some states do exempt businesses with five or fewer employees from the Worker’s Comp requirements, but in most states, those with even one employee will require Workers Compensation insurance.

For a small business just starting out, having Workers Compensation insurance will ensure that you and your employees are protected. This is important, but it does bring with it the unfortunate downside of high premiums costs.

If avoiding large lump sum insurance premiums sounds good to you, then as an alternative you can look into pay-as-you-go Workers Comp insurance.

What is Workers Compensation?

Workers’ Compensation (or worker’s comp for short) is a state-mandated insurance that will protect your business if one of your employees gets injured or becomes ill while working.

This employee will receive monthly Workers Comp payments and benefits that generally cover accidents such as injuries to or loss of limbs, worksite accidents and repetitive motion injuries.

It will also cover medical treatment or the rehabilitation needed so workers can return to work, as well as lost wages that are usually up to two-thirds of the employee’s salary. In the event of a tragic death, this would also be covered, as well as liability insurance for the company for any lawsuits that are filed by injured employees.

Some states allow businesses with specific numbers of employees to elect coverage, or even attain it through a state fund. Of course, there are private providers as well, and any employers outside of North Dakota, Ohio, Washington and Wyoming can purchase Workers’ Compensation from whomever they want. Businesses in these four states specifically must purchase from the state and are known as monopolistic states.

The only state that does not require Workers Comp is Texas. Therefore, since most states do require businesses to have Workers Comp insurance, it is a cost burden for many. As such, there are many employers who look for options such as pay-as-you-go Workers Compensation insurance, for example.

Act Now, Get Protected Easily, Quickly and Affordably

See how much you could be saving, with best in class insurance partners.

Start your application and get a free quote in minutes.

Or call (646) 844-9933 anytime.

Get protected easily with CoverWallet

What is Pay-as-you-go Workers Comp

Typically when you invest in Workers Comp, you will need to pay large payments that cover your liability costs. This can be a huge burden for a business that is starting out, and even a high cost to any business in general, especially those with a large number of employees.

Pay-as-you-go workers compensation is essentially a set of installments. It allows you to make payments on your premium each time you do payroll. This allows your Workers’ Comp liability to be spread between the year, and you in turn will undergo fewer upfront costs.

The amount you actually pay with each payroll is also based on the payroll that you run. Therefore if you lose employees or hire more talent, your liability will change and you will only be paying for who you have hired.

Pay-as-you-go Workers’ Comp is a great option for most businesses and is open to businesses in every state besides North Dakota, Ohio, Washington and Wyoming.

Benefits of Pay-as-you-go Workers Compensation

  • Eliminate large payments and lower upfront costs

Large annual payments can put a dent in your business budget and affect cash flow. Depending on different factors that could include where your business is located, the industry and how many employees you have, Workers Comp can be extremely expensive.

To put it into perspective, general coverage rates range from $0.74 – $2.74 per $100 of employee wages.

Let’s take an example and say that your coverage is on the lower end, and costs $0.80 per $100 of employee wages. You have ten employees who will earn a combined total of $450,000. Divide the total wages by $100 to get $4,500. Next, multiply $4,500 by the Workers Comp rate, which will get you to $3,600. This will be the annual cost of your Workers Compensation insurance.

With pay-as-you-go, instead of paying $3,600 at the beginning of each billing cycle, you can pay it in installments each time you run payroll. This will ease the financial burden for any business, especially those starting out or struggling to break even.

  • Hold on to your money longer

Since monthly premiums are quite literally pay-as-you-go, you can hold on to your capital longer until it needs to be paid each month. This is especially helpful for businesses that need cash flow or have a lot of overhead costs.

  • Pay accurate premium amounts based on your schedule

Standard Workers Compensation insurance requires premiums that are solely based on estimates. This means that each year you must guess what your projected payroll will be, and pay it upfront.

Knowing exactly how much Workers Comp that you will need for an entire year is very difficult to predict. You might decide to hire or fire employees which would both affect your rate. At the end of the year, if your estimates were inaccurate, then you will either pay more or receive a refund from your insurance provider.

The benefit that pay-as-you-go workers compensation insurance provides is that there will never be any guesswork, and you will never need to estimate. Each payment will be accurate and exactly what you owe with each payroll. This avoids paying more or less than necessary and helps you to pay accurately and only for what you need.

  • Automatic Workers Comp payments

When running a business you have plenty of things on your mind and many tasks to be completed. The last thing you need is to think about making payments.

With pay-as-you-go workers comp, your policy provider automatically collects your premium each time you pay your payroll. Instead of writing a check or submitting a payment, your provider will simply debit your bank account and you won’t need to think twice.

This not only simplifies your responsibilities as an employer, but it also confirms you won’t make any mistakes when submitting payment. Simply put, you will never miss a deadline.

  • Minimize the risk of penalties

Accurate calculations minimize the risk of penalties. You should be worrying about maximizing profit when running your business, not worrying if you accounted for the two new employees and loss of another.

With pay-as-you-go monthly workers comp, instead of worrying about being audited at the end of the year, you can focus on paying taxes as scheduled and running your business properly.

  • Integration with Payroll

Pay-as-you-go workers comp insurance is integrated with payroll services. This means you can use Intuit Quickbooks, Gusto, Intego or any other payroll provider that offers pay-as-you-go services.

This means that while you are finishing up your payroll every week or two weeks, you can also be paying your workers’ compensation insurance premium while getting the best rate for your insurance. Consolidating the bills you need to pay has never been easier or at a lower rate with a pay-as-you-go plan.

Would you benefit from Pay-as-you-go?

Every state besides Texas needs to have Workers Comp, and every other state (besides the four monopolistic states) require Workers Compensation insurance. This means you most likely need to have workers comp, but you do not need to pay your premium upfront.

Pay-as-you-go is a great option for most businesses, but there are specific industries that may benefit even more than others. This might include businesses that specialize in cleaning such as janitorial services, commercial or institutional construction companies who hire new workers regularly, food service businesses such as full-service restaurants, as well as healthcare or landscaping service-based businesses.

Furthermore, these service-based businesses would especially benefit from pay-as-you-go workers comp services mainly due to the fact that these businesses often have a rotating employee list. Using pay-as-you-go services would make it stress-free to hire and let employees go as you choose.

Not Sure If Pay-as-you-go Workers Compensation is Right for You...

Are you confused about how you might benefit from a pay-as-you-go Workers’ Comp insurance plan?

Does it seem enticing but you don’t quite understand how it all works?

Are you somewhat sure that you want to avoid paying high premiums upfront?

If avoiding high premiums and the extra headache of paying Workers Comp in a lump sum is something you are interested in taking action on, then take advantage of our expertise at CoverWallet. Simply click on the “Get Quotes” button to speak to an advisor that will give you more information, and solve your doubts.

Are you ready to get down to business?

Start your application and get a free quote in minutes or call (646) 844-9933 anytime.