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Insurance, explained clearly by a family with three generations of expertise.
Aaron (00:00)
Hello everybody and welcome to the speaking of insurance podcast. My name is Aaron Bollinger.
Brian Bollinger (00:04)
And I'm Brian Bollinger.
Aaron (00:06)
Because the delays that it's been taking to get this podcast going today, Dad, can I file a workers' compensation claim?
Brian Bollinger (00:13)
No, I'd probably say it's a hostile work environment at this point, so but it's more of an employment practice liability claim.
Aaron (00:19)
But we're here to talk about workers' comps. So, you know, what if I go get a paper cut?
Brian Bollinger (00:24)
If you get a paper cut, you're totally entitled to filing a workers compensation claim. Basically workers comp though typically is reserved for more than just first aid. It's usually for serious injuries, things requiring more than just a a band-aid. So it would have to be a pretty bad paper cut.
Aaron (00:40)
For the average listener, maybe they're a business owner, they own a small ish business, maybe those who who own the bigger businesses we can talk about later. But let's start with those people who are starting off maybe in their contractor journey or or business journey. And maybe they don't have any employees yet, but they really want to start getting some. What are some things that they should keep in mind before the hiring process and you know, just in general in terms of their workers' comp insurance?
Brian Bollinger (01:01)
The most important thing, at least in California and most other states, is it before you start hiring employees, you should have your workers' compensation insurance policy in place. So get the workers' comp coverage in place, then hire the employees. The second thing to keep in mind, and this is probably the more important thing, even because it determines how much you're going to pay for premium, is trying to predict pay predict payrolls is hard, obviously. But the more important and easier thing for you to predict is what duties are those people actually gonna be doing? What occupational hazards are they gonna have? You explain that.
Brian Bollinger (01:31)
And we can get you a workers compensation code, a class code, that describes that operation.
Aaron (01:37)
Interesting. What the most common class codes that you see?
Brian Bollinger (01:41)
We see a lot of clerical class codes, outside sales class codes for like business, white collar kind of stuff, maybe telecommuting even at this point after COVID. But in terms of the contractors class codes, it runs the gamut, right? If you're in concrete, you have concrete class codes. If you're doing electrical work, it's electrical work, plumbing, plumbing. some of those are even more complicated because there's actually a dual wage. If you have a lower wage, it's a higher rate, but if you pay over a certain dollar threshold, the rate actually comes down.
Aaron (02:08)
Usually it's around thirty two dollars an hour, I think, that they that they have for the that threshold, but obviously it differs company to company. interesting. And obviously those roofing ones, they can be way more expensive, right?
Brian Bollinger (02:21)
Yeah, roofing tends to get a bad rap, right? Something about standing up on a sloped roof in the rain causes people to fall off, slip, get hurt on a higher frequency than a lot of other industries. So you think about it, the class codes reflect the actual rate of injury statewide over the course of time. That's how those rates are actually determined, how the class codes are determined.
Aaron (02:43)
Yeah, so obviously those people in the construction industries, they have a higher risk of people getting into to injury, you know, accidents and whatnot. But let's talk a little bit about the additional liability exposure that that comes with maybe improperly setting up your workers' compensation insurance and how important it is to have, you know, a proper experienced set of eyes on it.
Brian Bollinger (03:02)
Yeah, the biggest challenge I'd say with a lot of companies starting out is they don't spend enough time early on talking about the classification of employees, job duties, your structure of how your your organizational your chart, right? as you grow, how that shifts over time. And it's very imperative too that you set up a very good documentation process.
Brian Bollinger (03:23)
Especially if you're in a construction class code that has more than one thing that you're doing. And the reason for that is the companies are allowed to put all of your payroll and the highest rated class code in the event you don't keep good records. So keeping good records could literally save you twenty to fifty percent on that workers compensation premium. So that that investment in time, that investment in that process is really, really important.
Aaron (03:46)
Yeah, I I remember a I think it was a sole proprietor, somebody who who was just determining what what they were doing. You know, they were doing a bit of everything. They were just you know, free floating, trying to do most of the work themselves, but they would on occasion hire people for the job. this person had I think it was what was it like eight, if any, class codes. Could you explain the the if any class code?
Brian Bollinger (04:07)
Yeah, one of the tricks we like to do is to try to show you what the different rates are. And so like if you're a contractor or a handyman or something, you might hire some to help you with concrete versus drywall, versus framing, right? First masonry block walls, landscaping. There's different class codes out there, tons of them, mind you, a couple hundred of them. The point being, when you talk to your agent or broker,
Brian Bollinger (04:28)
Hopefully you're able to describe what operations you're gonna be doing, and then you're able to get those different classifications. You get a feel for the rates, if nothing else. And then once you get the feel for the rates, you need to start thinking again about your record keeping, how you're gonna say, did this person work on landscaping this time or framing or roofing? roofing is kind of a special niche, I understand. And so I'm just using that as a kind of an example of a higher cost class code. But again, if somebody's doing sales work for you, you don't want them being classified as being a roofer. It's gonna cost
Brian Bollinger (04:58)
you way too much money and you don't want to get ripped off by the insurance companies.
Aaron (05:02)
Let's talk about how also important it is to have proper payroll projections, payroll projections. I know it's a little bit of a mouthful, but obviously we have insureds that, you know, estimate they're gonna be doing X, Y, and Z numbers of payroll in that. And then at the end of the year that audit comes in and it'll either save you or it'll really kick you in the butt.
Brian Bollinger (05:20)
Yeah, and there's strategies for that too, right? I mean, one of the things we like to do with our clients that are on a fixed reported payroll. So every year they say they're gonna do certain amount. We like to check in about halfway through the year, just make sure it's in line with what you know what they were predicting, you know, six months before or nine months before when they were filling out that paperwork. Because things change. there are some other options with some companies where you can do like a monthly pay reporting, which says this month we actually had these payrolls in these class codes, and you attach your pay report.
Brian Bollinger (05:48)
And you send a check-in with it basically. So you kind of pay as you go, which is very convenient for a lot of insureds. The downside with that is it's another step every month. So if you don't have somebody in the office that can manage that for you, it can be kind of complicated too.
Aaron (06:02)
That that goes into the the importance of having those clerical staff, those people to help organize your system, especially if you do have a bunch of people who are out at the job site, somebody who can in house manage that payroll, manage your your insurances as well. Right. I mean, it's it's hard for business owners to go do all those things by themselves as they grow.
Brian Bollinger (06:19)
Yeah, wearing too many hats, I'd say, is the biggest failure that most business owners ha ha do. I mean, it just it's too hard, right? There's too many various things you have to know and do and respond to, and you end up running yourself ragged working on things you're not very good at. So one recommendation is to start early on talking to your advisory team, your attorneys, your accountants.
Brian Bollinger (06:40)
you know, your insurance agent or broker, and really getting a feel for what systems you need, how you're currently set up, how you're currently operating. And as your business grows and evolves, make sure you update your team about what's actually happening.
Aaron (06:52)
Yeah, as as the different parts of your business come together. I mean, obviously in the beginning it's a little bit discombobulated, a little bit disjointed. And, you know, we've seen those, if any, class codes that really do pop up for those sole proprietors who are just looking around to get jobs. it it is really important as you grow to kind of, you know, not only niche down in terms of your insurance to to narrow your liability exposure, but also for your staff people. So it's it's clear what the expectations are, what the jobs are, things like that, right?
Brian Bollinger (07:20)
Yeah, and a lot of times too, like you don't think about it, but as you hire new people, let's say they're gonna be a driver on your commercial auto policy, that needs to get communicated back to your agent or broker. It may not have to change your workers comp policy if you hire somebody new. Like that's not a big deal. There is a final lot at the end of the year, like you said, and they will true up that bill and that bill will be whatever it's gonna be. but we try to minimize that shock that people get at the end of the year.
Aaron (07:45)
Let's talk about claim severity because I know that's a really big thing. I mean, we talk about auto insurance and how those prices are skyrocketing because, you know, as as people see the lawsuits coming in, the paychecks being given out, you know, more people are gonna hop on the bandwagon in in a sense and you know, really go for those lawyers and their big billboard signs. Let's talk about the workers' comp aspect of it. I mean, what firstly, like how does it coordinate with the commercial auto insurance? And then secondly, you know, how how have you seen the the claim severity and frequency increase?
Brian Bollinger (08:14)
Yeah, workers' compensation insurance, you know, goes through cycles, right? There's times when there's a lot of claims being filed. Even the state of California does some reforms, the state that you're in does some reforms, and it kind of throttles back the claims a little bit. I'd say what's free it there's two things, right? Frequency and severity. So the frequency of claims, you know, bad cuts to your hand are not good. for example, I'm thinking of a sheet metal contractor where they're putting in ductwork in a commercial building. They had some issues with people getting their hands cut.
Brian Bollinger (08:44)
So they changed out their gloves to more expensive, thicker, more robust gloves, and it really reduced the frequency and severity of their claims. But the severity is definitely a big problem. One of the things the insurance companies look at, besides the classification and the X mod, they look at have you made the prior insurance companies money for the last three to five years? If you're not making the insurance companies money, they're gonna raise your rates.
Aaron (09:09)
Yeah, it is, it is an industry. Of course, every industry ever is run on profit. Your business is run on profit. I mean, you're looking for profit as an insurance company, same way that, you know, it it goes both ways. And obviously you want to make the insurance company's money, but you want to have it there as as the backbone to make sure that your business doesn't, you know, sink, right? And so let's talk about that commercial auto cross liability exposure because if somebody were to get into an accident in a truck, let's say, how how does that work with the with the workers' comp?
Brian Bollinger (09:38)
Yeah, we had one bad one a long time ago. Not like six years ago, eight years ago. there was somebody who had a commercial vehicle. they were allowed to drive home.
Brian Bollinger (09:47)
And so they were commuting to the office in the morning, which is something we typically don't recommend to clients now. We say, look, don't give people cars to drive back and forth to the office in because they become an employee while they're commuting. If they're driving their own cars, it's not your problem. But in this situation, they did have that commercial vehicle. The guy went and had a breakfast sandwich. I don't know if it McDonald's or Jack in the Box, whatever, but he's got a coffee and a sandwich. He's driving down the road, you know, at four o'clock in the morning, five o'clock in the morning, trying to get, you know, to a job site a hundred miles away. you know, because that's what had to do with this particular
Brian Bollinger (10:17)
project. And so, you know, he's driving fast, whatever, eating, whatever, looks down, whatever, spills the coffee. Who knows? Somehow his car actually ends up underneath a semi-trailer. The truck does, loses part of the top of the the cab of the small pickup truck. The guy ends up losing part of his scalp.
Brian Bollinger (10:34)
brains exposed, in the hospital for months. basically I don't think he was ever able to work again even. and so in that situation, the commercial auto was there for the liability for the accident where, you know, he
Brian Bollinger (10:47)
caused the accident with the truck, it looks like. So you had to pay the truck driver and that stuff out of the commercial auto policy. But it was also a worker's comp claim because it was the employee driving the car, even though it was the employee's fault, still had a worker's comp claim because of that driving exposure. So again, these are things where you talk about the nuances of insurance. He got hit with a huge increase in his auto rates and a huge increase on his workers' comp premiums.
Aaron (11:13)
But boy, was he happy that he had good insurance, huh?
Brian Bollinger (11:17)
Yeah, I mean it was sad though. I mean it's so hard when an employee gets hurt, you know, and there's nothing you can do. I mean, it's a very helpless feeling. And, you know, that's why you have workers' compensation insurance too. It's a no fault system. So basically the workers comp company just pays the money, you keep operating your business, and you're able to just keep move forward.
Aaron (11:36)
Yeah. And it again, it it boils down to how good is your insurance plan? Are you ready for situations like that? I mean, you can never be ready for situations like that. And that's that's one of the reasons why we recommend robust insurance plans and proper coordination of all your policies, because freak accidents happen. And again, you shouldn't be the one that fully pays the price. Of course, you're gonna pay you're gonna pay some price, you're gonna pay some mental toll, but just the fact that your business or that person's business was able to still
Aaron (12:05)
you know, operate after such a such an accident is is frankly a miracle. And obviously, you know, a what is it, disclosure warning or or, you know, trigger warning to people who who heard the part about the scalp and started to freak out a little bit.
Brian Bollinger (12:18)
Yeah, no, it was pretty horrible. I mean the poor guy was in like a coma for months. It was bad.
Aaron (12:25)
But g getting back to hopefully let let's talk about
Brian Bollinger (12:27)
On the better topics.
Aaron (12:30)
let's talk about scheduled credits or or how how we can you know lower that cost by switching insurance companies. We've seen, you know, a bunch of companies that we've worked with as we you know shop our markets upon renewal. what what type of credits are you seeing from companies and do you see it over different class codes? I mean, because a lot of people, you know, they're they're shopping their insurance left, right, and center on their on their personal lines. Should they be doing the same on their on their commercial?
Brian Bollinger (12:55)
You I think workers comp is one of those coverages that you try to partner with a good company. and what I mean by that is sometimes the cheapest rate out there is not actually able to give you good claims handling. And if they don't handle claims well, you could actually end up maybe saving some money today, but over the course of those five years or three years post
Brian Bollinger (13:15)
your relationship with them, you could be paying substantially more for your workers' compensation insurance. So it's kind of a difficult dance to do. The goal is to get you the best company we can in terms of aggressive claims handling and then also loss control and safety measures, helping you get those safety programs in place to get the additional discounts so you can drive your premium down.
Brian Bollinger (13:35)
Even the X mod rite saves you money too. We had one guy, I think he got it down to a 38%, I think it was, or 43 X mod, which means his base rate was 43%, let's use that number, of what the average company pays in that industry. Not just the manual rate. He actually got discounts on top of that. He was paying like 32%, 34% of what his competitors were. And that extra like 60% of you know savings.
Brian Bollinger (14:02)
on his workers' compensation premium, that was actually profit to his bottom line. So he was making more money than his competitors, able to grow his business, sustain his business. It's it's a competitive advantage if you have well structured safety programs and well structured insurance programs.
Aaron (14:17)
How'd you know you you were reading my mind, I want to talk about safety programs, especially for I mean, even for jobs that are just sort of clerical. I mean, you you talk about, you know, these higher risk ones, obviously making sure that guards are on, like you had mentioned the thing with the thicker gloves, making sure that the equipment is properly set up. what what are some some points just like high level that people can look at and say, okay, this one strategy could be used in our business to to lower our possibility and susceptibility to claims?
Brian Bollinger (14:45)
The biggest thing is just being proactive. You know, a lot of our people that come to us, it's after they've had a lot of claims, their X mods through the roof, they're paying double what they were, you know, a couple years ago. They have a huge claim frequency and severity issue. and then we have to go in there and basically help them grind that down. And what that takes is basically a culture shift. So it's much easier for us to have a conversation with somebody who hasn't had claims saying, hey, we want to lock in where you're at.
Brian Bollinger (15:10)
We want to reduce the potential of claims frequency and severity by having safety meetings, by having tailgate meetings, again by being proactive about walking through your workspace and seeing what what the hazards are there. we even offer complimentary third-party evaluation of your of your job sites. We can bring in a third-party consultant to come in and do that mock calosha inspection. Because one of the things that employers don't realize is that it's not just the workers' comp premiums and rates that can be a problem for you. You got the WCRB, the I mean, sorry, you the
Brian Bollinger (15:40)
Kalosha out there, you know, also regulatory environment, they can find you, shut down your business, shut down your job site. And those kinds of things can be really, really difficult to endure if you're a contractor. You have to disclose that to all the bids you're shop, you know, shopping in the future. It can really prevent you from growing your business.
Aaron (15:58)
Yeah, one one hundred percent. And WCRIB is the company obviously that that uses and helps calculate some of the X mods, right? And then the Kalosha is a whole nother freak exposure. you know, it's easy it's easy to get 'cause all of them are are working together. Now, you know, obviously they're they're somewhat independent, but like in terms of their like coexistence in in impacting your premiums, impacting your company, it's it's all, you know, this huge jumble of things that you have to consider. And like you said, it all boils down to to proactivity.
Aaron (16:27)
And obviously the people who who are proactive, the people who, you know, go down to those lower X mods. I mean, obviously claims happen. And that's just the truth. And so if you do have a claim, making sure that it gets sorted properly. And so let's let's talk about that. Like in the instance of a worker's compensation claim, let's talk about the employee and let's talk about the employer. Let's start let's start with the employee. What should the employee be be looking for or trying to think about when they go and file that claim or are thinking about fly filing that claim?
Brian Bollinger (16:55)
Well the claims that are the easiest to understand is where something happened and it just happened that day, right? You you cut your hand, you you've you've you know
Brian Bollinger (17:03)
broke your foot, you bumped your head, you know, whatever it is, right? You got some kind of problem and it's very visible and everybody knows it happened, right? That's the easiest thing, right, to kind of, you know, document and and go from. So I would say the average employee, you know, that's the best way is to tell your supervisor, tell your coordinator, tell somebody, you know, that, hey, I I got hurt, you know. And nobody wants to actually have that discussion with anybody. but again, the sooner you bring that up to your supervisors, the better.
Brian Bollinger (17:32)
The longer you wait, the more difficult it is to substantiate the claim. you know, we've had some people come back years later saying, hey, I hurt my shoulder. And it is harder for the insurance companies, and it does sometimes involve litigation, and people do fight it, and you know, it's just a whole mess, right? the system is designed to help get injured workers back to where they were. That's what it's designed for. So for you know, medical treatments, physical therapy, these kinds of things. Then if you lose some wages, it does give you a little disability income.
Brian Bollinger (18:01)
But a lot of times that disability income is so much less than employees are actually making that it actually is a financial strain to go on a workers' comp claim. So I just think that proactive treatment isn't is the first step.
Aaron (18:13)
That's really interesting that you say that. Obviously, I mean you you hear it out loud and it, you know, it makes complete sense. The the level of, you know, just make sure that it's known. Right. Obviously that that's the first step is is to make sure that it's known, make sure that it's out there, make sure that people know as well. And and obviously you use the word substantiate and that that's definitely a great way to to think about it, in terms of like the recency of the claim. And obviously it's a lot harder to to believe somebody who comes back years later and says something. So
Aaron (18:39)
making sure that it's a recent ish event and that it's it's believable and that it's true, right? And it's it's tangible and, you know, a a doctor could go and and, you know, determine it or and whatnot. let's talk about the employer now. How how how can the employer approach that claim process? An employee approaches them, says they want to file a claim. What what should they be thinking about doing?
Brian Bollinger (18:59)
Well, I mean the first thing is try to assess how bad it is. You know, if it's a first aid claim, like you mentioned before, that paper cut, probably is just a first aid thing. Get the first aid thing figured out. Probably not a big deal, right? Put the bad on it. If it's something more substantial, at least note it somewhere that, hey, you know, Joey, you know, says something happened. And then you kinda go from there. you know, we've had some situations people think it's gonna be a really big problem and it isn't.
Brian Bollinger (19:23)
And then on the flip side, we've seen things we thought were non issues become very big issues, right? somebody says they they heard something on a Friday afternoon, you know, lifting heavy drywall and on Monday morning they can't walk. And it turns out they they
Brian Bollinger (19:36)
you know, had some problem with their knee. and so it really gets in the specifics of exactly, you know, what happened, when it happened, but documenting that with your supervisor on that Friday makes it a lot easier than Monday morning you come with an injury saying, hey, I hurt my knee, you know, on Friday, it's like, well, did you go bowling this weekend? you just don't want to have those kinds of questions. Just easier to to you know document it, be honest, and go from there.
Aaron (20:02)
Awesome. Well, I I feel like you know we've touched on all the employer aspects, most of the employee aspects. We we can boil it down to, you know, SIC code and different risk exposures. But you
Brian Bollinger (20:13)
Yeah, I want to add one thing to it, right? If when you're notified of that potential claim and you do the first aid thing or not, you know, one thing is once it looks like this is going somewhere to be a claim, report to your workers' compensation insurance company so they can get a claims adjuster on that case sooner rather than later. I've seen some employers try to wait, you know, a month or two until, you know, hey, it you know, is Sally really hurt? Sally was really hurt, you know, and you don't want to have that.
Brian Bollinger (20:39)
situation where if the insurance company would have been on the claim sooner, maybe they could had a better containment of the cost, they could have had better treatment sooner. Maybe the severity wouldn't have been as bad. So proactivity is another thing that I just want to make sure we're aware of.
Aaron (20:53)
Yeah, well, I mean that's that's the word of the day. I feel like it's the word of insurance in general. We're gonna keep talking about it. la last little thing we're gonna be doing. So, you know, this is obviously informative for business owners and for people who are interested in business. just the high level workers' compensation understanding of having employees and being an employer. what's your favorite part about being an employer?
Brian Bollinger (21:15)
You know, being an employer is just a lot of work. I mean, honestly, every client we talk to, but the biggest reason why you have, you know, why you're an employer is because you need the employees to grow your business, right? At the bottom, the bottom end here, the bottom line is that you have to have employees to grow your business. You have to have them to scale, you need them. So if you can have some good workers helping you succeed, that's that's it, right? A good team is what we're trying to build.
Aaron (21:41)
Well, hopefully you feel like you have a good team. might be a part of that team, but well
Brian Bollinger (21:46)
Of course, son. You're wonderful.
Aaron (21:49)
you you're wonderful as well. what what's the independent advantage here? What's what's the the number one thing that the independent insurance broker is able to offer you that these other captives aren't?
Brian Bollinger (22:01)
I think the biggest thing is just that open line of communication and trying to get you access to the best options for your business. A number of companies are very good at what they do in terms of workers' compensation insurance. Being an independent agent and broker gives us access to, you know, 50 different carriers pretty much that do workers' compensation insurance. When you just get tied down with one particular thought or one particular agency or one particular insurance company, it can become problematic. so it's important from time to time to at least have that discussion and and review what options.
Brian Bollinger (22:31)
are available in the marketplace. Sometimes we you do we do like that one company we put somebody with or the client really likes them. I can think of four or five companies that my employers, you know, my clients don't want to move away from. But we do shop that quote.
Brian Bollinger (22:44)
against, you know, the renewal quote, against other companies. And then we say, hey, look, you're 20% higher than XYZ company out there. If you want to keep this client, you gotta, you gotta give us some credits. So I'd say the biggest thing is insurance is a game of negotiation. And I think you need to have somebody helping you negotiate the best possible terms for your business and still letting you have the choice in terms of what you want to do.
Aaron (23:09)
Perfectly put, perfectly put. Well, thank you so much for your time today, Dad Brian.
Brian Bollinger (23:14)
Thank you. Have a good one. Thank you so much.
Aaron (23:16)
Awesome. hopefully, yep. Of course, yep. Hopefully you all enjoyed that. Those of you who listened to the end of this. if you have any questions, comments, you know, just drop them in the comments below. you could email us. You know, we're we're always reachable. Bolinsure.com, B O L L I N S U R E dot com. yep, zero cost consumer information. That's the goal, right?
Brian Bollinger (23:39)
Thank you so much. Have a great weekend.
Aaron (23:41)
Yeah, you as well. Thank you.