It may seem obvious, but every business owner has a duty to protect himself and his employees against workplace-related injuries. Diligently maintaining a clean, safe environment to minimize hazards and risk is always a priority, but accidents can and will happen. For this reason, workers’ compensation is a critical coverage for self-storage operators.
This insurance is designed to assist staff and their dependents, but it also has benefits for owners. In the unfortunate event of a work-related incident in which someone is injured even disabled, this coverage provides medical care and compensation. Knowing an employer offers this benefit can provide peace of mind and even be a motivating factor in job recruitment and retention. There’s also less stress and worry for owners because they know they have a plan to take care of an injured employee and his family.
In addition, workers’ comp provides a measure of protection against lawsuits by minimizing the need for attorneys. The benefits to dependents of those injured may include lost-income coverage and a variety of death benefits.
Who Needs It?
There are a few things self-storage owners need to keep in mind when considering this coverage. Most states have a requirement, depending on the size of your business and number of employees. Though I strongly recommend this coverage if you have any staff, check your states laws to see when it’s mandatory. Businesses that don’t comply could face fines and penalties. Even if you only have one employee, it’s highly likely you’re required to carry workers’ comp.
You may have the option, as the owner, to include yourself under the coverage. Most owners opt out, however, because many wouldn’t file this type of claim against themselves and would rather use their own healthcare benefits. Also, the premium for this type of policy is based on payroll. Since owners usually have the highest pay at a self-storage facility, eliminating yourself from the coverage can help lower the cost.
Again, it’s important to check your state’s requirements, as some states will automatically include owners and charge a premium based on a set minimum salary. In these cases, you can likely sign a waiver of exclusion to be removed from the policy. It’s important to talk to your agent and be aware of these conditions so you aren’t charged for something you might not want.
It’s important to understand a worker’s comp policy is auditable, so don’t fudge the numbers. It’s also vital to complete the audit timely. If you don’t, the carrier will likely put payroll at one and a half times the reported annual payroll, causing a hefty premium.
By the Code
Every state has its own set of class codes to rate workers’ comp coverage and calculate a premium. Discuss the specific duties of your employees with your agent to ensure he’s using the correct ones. Most states have a clerical-based code for office workers. This type is very strict and 100 percent exclusive to clerical and desk-based duties. The rate used to calculate the premium for this type of code is going to be far less expensive than one used for more physically demanding jobs, since the chance of injury is much greater in the latter.
One of the most common examples is an employee using a ladder. Related accidents happen all too often. If you’re thinking, “My manager only goes on a ladder once a year, so nothing will happen to him,” think again. If an incorrect code is used for your staff, this may cause some trouble in the event of an accident or claim. That defeats the purpose of having this policy in the first place.
If you’re using a clerical code for your worker’s comp coverage, and an employee gets injured while cleaning out gutters using a 12-foot ladder, this may also cause coverage issues and delays in claim-handling. To avoid this and ensure you’re properly covered and charged, be clear about all employees’ roles and tasks so your agent can determine the best code to use.
Along with proper class code, there are a few other factors that play a part in determining the cost of a workers’ comp policy. Location, payroll, number of employees and experience modifications are also key elements.
The Audit
Again, workers’ comp is an auditable policy. Employees and salaries can change throughout the year. At the end of the policy term, your carrier will send forms you must complete to report your actual values for the year. It may even do a phone audit.
If you underestimate your payroll, you’ll end up owing additional premium at the end of the term. If you fail to respond to the audit request, the carrier can apply minimum ratings after several attempts, forcing more premium due. On a positive note, if you report a lower than anticipated payroll, you can receive a return premium or have this credited toward your next policy term.
As with any of your insurance coverages, it’s best to work with an agent who has experience in the self-storage industry. He’ll be familiar with class codes and be able to make recommendations based on your business specifics.
Your employees often become like family. When an injury occurs, you want the person to feel better and heal as soon as possible because you care about this well-being. A quick recovery also means he can get back to work as soon as possible. At the end of the day, your business’ success relies on your staff showing up and being healthy. This is why workers’ comp is a crucial protection. The coverage is made up of several layers, with different purposes and benefits for owners, employees and their dependents.
Jenny Bortman is vice president at Universal Insurance Programs, which has created and provided specialized insurance coverages to the self-storage industry for more than 20 years. For more information, call 602.222.8300; visit https://uiprograms.com.
