Pay-as-you-go Workers’ Comp Insurance is increasing in popularity in the business world. Eliminating up-front costs and outdated payment methods are two of the biggest reasons businesses are turning to pay-as-you-go for workers’ comp insurance. Compared to an estimated annual payroll amount, pay-as-you go relies on real-time payroll to calculate workers’ comp premiums. This results in more accurate premium payments. Also, this means less of a chance to pay too much throughout the year – or have a premium adjustment at the end of the policy term due to under-reported payroll. Find out more about workers’ compensation insurance rates here.
Lower Upfront Cost and Smaller Monthly Payments
First, with pay-as-you-go Workers’ Comp, you don’t have to make a large, cash-flow-killing down payment up front. You can buy Workers’ Comp Insurance with little money down, and then pay your premium in smaller amounts spread over the course of the year.
Second, with pay-as-you-go, your premium payments are based on your actual payroll, not projected annual payroll. That can help protect you from audit exposure, because your premium is based on real-time payroll wages, not an estimate. Plus, spreading these costs out over the year, versus an up-front payment, helps your business manage Workers’ Comp Insurance costs.
Third, pay-as-you-go Workers Comp is simply an alternative way of making your premium payments. It’s not different insurance, and it doesn’t replace your workers comp 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 carrier or approved self-insured source.
Finally, we urge small businesses to consider the pay-as-you-go method of paying their Workers’ Comp Insurance costs. We serve California businesses for over twenty years with all their business insurance needs. You can learn about this program by calling us 1.818.754.0007 and talking to our business insurance advisers.