Insurance costs have always been a top concern for contractors of all trades and are usually a “top five” expense, along with payroll, material cost and vehicle expenses.

Insurance agents frequently see several areas where money can be saved with a few quick fixes. Sometimes these changes can be as simple as these five recordkeeping and paperwork reporting procedures.

1. Keep separate payroll records for premises and field work

Most contractors have some staff that spend zero or very limited time in the field. This can include mechanics, yard employees and ancillary fabrication shops. If separate payroll records are not maintained, these employees will be lumped in with the field labor. If payroll records reflect the labor division, the on-premises employees can often enjoy a lower Workers Compensation rate. The rates tend to be lower because yard or shop employees are not subject to worksite hazards.

2. Keep separate payroll records by jurisdiction

Depending on where contractors are located, they may be able to enjoy lower Workers Compensation rates by separating their payroll records by jurisdiction. For example, it used to be that everyone was afraid of paying D.C. Workers Compensation rates. Over the past few years, D.C. has become the most favorable rating state for many trades in comparison to Maryland and Virginia. By separating the payroll, contractors located in this area can often enjoy a lower Workers Compensation rate for D.C. labor.

3. Apply for the Construction Credit Premium Adjustment Program (only available in select states)

This program was originally designed to “level the playing field” on Workers Compensation costs between union and nonunion contractors by providing discounts based on the amount of a contractor’s Average Hourly Wage. The higher the Average Hourly Wage, the higher the credit amount. Because of the growing prevalence of jobs requiring payment of Davis-Bacon Scale Wages (aka Prevailing Wage), it is not uncommon to see nonunion contractors qualify for CCPAP Credits.

4. Drug-Free Workplaces

Drug-free workplaces receive a 5 percent credit from many insurers in select states. In order to qualify for the credit, a comprehensive Drug Testing Program must include testing:

• pre-hire;
• post-accident;
• random (frequency varies by employee count); and
• reasonable suspicion.

This is not always an easy step. There is always the risk that contractors may lose part of their workforce when they implement a drug testing program. However, the long-term benefits are worth it. These benefits can include reduced substance abuse in the workplace, reduced accidents resulting from impairment and a lower Experience Modification Rate as a result of fewer claims.

5. Invest in PPE

Invest in personal protective equipment (PPE), train employees on proper use of PPE and then enforce its use. Eye protection, hearing protection, gloves, proper footwear and hardhats should be non-optional. Proper use of PPE in the shop and field can help eliminate many common Workers Compensation claims that insurers see.