Safety Management
Cutting Risk: How Construction Safety Software Reduces Insurance Costs
Every job, from the desk to the construction site, comes with some inherent risks. A BandAid might fix an office stapler incident, but an accident on-site often requires a paperwork-heavy insurance claim. Utilizing construction safety software digitizes the claims process and drives down the cost of standard insurance policies—especially workers’ comp. While there are a few workers’ comp factors that are out of your hands, your Experience Modification Factor (or E-Mod) is well within your control. The proper construction safety software will bolster your E-Mod and drive down your workers’ comp premiums.
While there is no federal workers’ compensation mandate, most U.S. states do require workers’ comp in one way or another. The same goes for Canadian provinces and territories. The best rule of thumb is to provide workers comp to all employees—consider it mandatory. Workers’ comp protects employees against lost wages due to injury. It also helps shield the company from lawsuits related to those injuries. In heavy-duty industries like mining and construction, workers’ comp can be one of the most expensive costs.
Your premium is determined by three factors: payroll, company classification, and your E-Mod. The first two factors remain unchanged. However, implementing digital safety suites and having fewer/less severe incidents can reduce your E-Mod factor.
Your state or national rating bureau calculates your E-Mod, not your insurer. It is calculated by a multiplier comparing your workers’ comp claims over a set period to other companies of similar size and job type.
The average E-Mod is 1.0, which means your claims history is baseline among similar businesses. An E-Mod greater than 1.0 means your claims history is worse than others. Less than 1.0 means you’re doing better. The active use of construction safety software is one such consideration that will cause the rating bureau to lower your E-Mod, in turn persuading your insurers to lower your premium.
According to the National Safety Council, the average cost of a workers’ comp claim is about $42,000. The most expensive claims result from motor vehicle incidents, burns, and falls—all accidents that can occur on a construction site. This may seem hefty, but if you operate in a state that requires workers’ comp and you do not provide it, an injured worker can sue to cover medical expenses. You could lose upwards of $80,000 in the case of a severe motor vehicle accident. Furthermore, you could face fines and even jail time.
Don’t, for any reason, forgo worker’s compensation. Instead, utilize construction safety software to lower your workers’ comp premiums by reducing your E-Mod. In the end, it could save you thousands of dollars should disaster strike.
The construction industry has been slow to adapt to the digital age. Many companies remain reliant on outdated technology, particularly in safety management and insurance claims. But the days of filing cabinets, hand-written claims, and VHS training tapes are gone in the digital world.
As the digital revolution continues, recent trends suggest that adopting construction safety software can slash insurance premiums. Construction safety software shows insurance adjusters that your company has staked its share in the digital present, instead of living in the paperwork past. Insurers see the use of such software as a reduction in risk, presenting your company as a leader in worker safety and compliance.
Beyond workers’ comp, there are other standard insurance policies that most construction companies need. For example, general liability insurance protects your company from a litany of risks, including injury claims and associated medical expenses. It also shields you from any damage caused to a customer’s property. General liability will keep you covered, whether it’s direct damage like broken windows or faulty installation like loose drainage pipes.
MarketWatch’s 2018 health insurance survey found that of the 20 jobs most densely populated by workers without health insurance, 11 were in the construction industry. When an injury occurs on the job site, uninsured workers face thousands of dollars in medical expenses and lost wages. The costs imposed on high-risk industries may deter smaller businesses from purchasing insurance; however, many blue-collar laborers are attracted to companies offering competitive health insurance policies. Lack of health insurance makes a company less attractive to skilled employees, no matter how safe their job site purportedly is.
Commercial vehicle insurance is another expensive policy, especially when you own a fleet of trucks and construction vehicles. Let’s say you own your own pick-up, but use it for commercial reasons. Here is a grey area between commercial and personal insurance—you’ll have to make sure your truck is covered by both.
With the insurance policies piling up, you’ll want to lower your premiums. Construction safety software shows adjusters you’re on top of safety protocol on and off the job site. Insurance adjusters are looking for consistent low-risk practices in a high-risk environment. Anything you can do to mitigate personal injury or property damage on the job site is another step towards lowering your insurance premiums.
Every business makes its best attempt to avoid downtime and lost revenue. Remain a step ahead of the competition by implementing the best digital procedures to cement your company in the 21st century.
Salus’ construction safety software will keep the entire job site happy, from the foreman to the accounting office. Salus’ platform utilizes digital forms for easy sharing, tracking, and collaboration. Your digital documents tie into the compliance management hub, where you can track and monitor daily activity. You’ll have a clear picture of who needs to submit their forms, keeping your safety protocols and reports up to date. If you’re ready to implement a tighter safety system and lower your premiums, reach out to Salus today and book a demo!