On this episode of the WorkSAFE Podcast, we sit down with Matt Speight, President and CEO of the Scott Agency, to talk about common work comp myths.
Many employers have misconceptions about how workers compensation actually works. Some don’t understand what types of injuries are covered. Others aren’t sure how claims impact their business – or how they can be involved in the process. These misunderstandings can lead to costly mistakes and missed opportunities to improve workplace safety.
With years of experience helping businesses navigate workers compensation – and as an agency partner with MEM since our inception – Speight clears up common work comp myths and shares helpful insight.
Listen to this episode of the WorkSAFE Podcast, or read the show notes below.
Myth #1: Work comp coverage is too expensive
For Speight, one common myth about work comp reigns supreme. “The biggest misconception that we typically see is that work comp is too expensive,” he shared. “The cost of the coverage has to always be looked at in relation to the actual cost of a possible claim.”
For example, a $20,000 policy is well worth the cost when a later claim totals more than $70,000. “While we hope a client – and the client hopes – they never have a claim, the cost of work comp is well worth it compared to the risk of having to be responsible for an injured employee’s lost wages, rehab, medical expenses, etc.”
Myth #2: Employers don’t need work comp if it isn’t required
Another common myth is that employers don’t need work comp if they have only a few employees. While some states require employers to carry work comp, not all states do. Work comp covers medical expenses, lost wages, and vocational rehabilitation. Without it, employers may end up in a difficult position.
Speight points out that without coverage, a judge may likely rule in favor of an injured employee in court, making the employer responsible for costs. “We always recommend that the customers consult with us and their attorney before deciding not to purchase work comp,” he added, highlighting the importance of the decision.
Work comp myths around subcontractors
Subcontracting is a common practice in several industries. General contractors often make a critical mistake: assuming they are exempt from liability in the event of an incident. However, this isn’t always the case.
Each state determines whether a subcontractor is required to have its own work comp policy. If a hired subcontractor doesn’t have work comp coverage and is injured on the job, then the employer could be left responsible for medical costs and lost wages. A Certificate of Insurance (COI) is a document that demonstrates a subcontractor has a separate policy covering their workers.
Myth #3: It’s impossible to get lower work comp premiums
High-risk industries and businesses with more employees can result in a bigger premium bill. A concerning loss history can also contribute to higher costs. For instance, tasks such as loading, lifting, and driving are considered important risks. However, employers can lower a work comp premium rate over time with loss control and intentional action. MEM offers risk reduction and safety solutions, including:
- Safety Grants. Funding should never stand in the way of keeping people safe. Apply for a matching grant to purchase and install safety equipment.
- Free safety resources. From free posters and sample policies to safety rules and starter kits, find everything needed to start building workplace safety culture.
- Policyholder training. Address unique risks in your workplace with access to a safety consultant or on-demand virtual training.
“It’s not a short-term process. It’s a long process to get those rates down,” Speight shared, revealing the reality. “It may take two or three years before those rates and those premiums and those experience mods go down. And it does take some work by the insured to get it done. But in the long run, it’s well worth it. I’ve saved lots of customers lots of money over the years.”
Myth #4: A few small claims can’t have a big impact
Some employers are under the impression that a few small claims have little impact on work comp. However, this is one of many work comp myths around claims. Even a few small injuries over time can affect premium costs.
“I actually tell my clients the opposite, that many small claims can actually be worse than one large claim,” Speight explained. While a larger claim may result in a larger payout, several small claims demonstrate frequency. Frequent small claims show that safety risks are present – and aren’t being addressed. “Frequency definitely hurts your loss history and your experience mod more than severity.”
Myth #5: Employers go through the claims process alone
A workplace incident is often an intimidating experience for employers. A work comp claim involves paperwork, answering questions, and ensuring an injured worker gets the right care. However, employers don’t go through it alone.
Communication is a key element in the process. Speight often dispels the common misconception that agents step in and handle claims. Throughout a claim experience, a network of communication is created, including the injured worker, the employer, the work comp carrier, and any medical professionals involved in treatment.
Myth #6: Getting injured workers back on the job sooner doesn’t make a difference
One of an employer’s most important assets is the people who make work possible: employees. When an employee is sidelined by an injury, one of the best ways to improve outcomes for everyone is to create a path back to work. Speight always recommends a light duty or return to work program.
“The longer the employee stays home, the more likely they’re going to want to continue to stay home,” he shared. “Even though it’s at a reduced pay, they get comfortable staying home. And if they’re in a job where they don’t have a way to come back to work, they don’t really have a choice but to stay home until they’re healthy.”
Even for injured workers with limited capacity, administrative duties help them get back into the workplace, into a routine, and socialize with other co-workers. For example, answering the phone or filing papers are simple tasks that bring them back into the company and let them know their contributions are valued.
Myth #7: Agents are only there at the start of a work comp policy
Business owners benefit from having an agent with them every step of the way, from obtaining their first policy and implementing safety measures to end-of-year audits and renewals. Speight encourages employers to find a local agent with whom they can share the unique aspects of their business. “You need that connection,” he reiterated.
Workers compensation isn’t as black and white as other types of insurance, such as car insurance. Coverage is tailored to a company’s specific line of work, number of employees, and level of risk. But when employers walk into the world of work comp, they don’t have to go alone.