When a company obtains a “stand alone” workers compensation policy, the premium is based on the estimated annual premium. Many times this can work to a companies disadvantage. It can be hard to predict annual payroll, and can create quite the shock at the end of the policy year when the premium audit is performed.
When the premium is set based on the estimated annual premium, it will often be premium financed and a 25% deposit will be required to bind the coverage. So, right away your company would have to relinquish cash. Once this deposit is made and coverage is bound, monthly payments are made based on the estimated annual premium. At the end of the policy year, a premium audit is performed and the actual payroll is compared to what was collected in premiums. This is where a company can suffer a huge loss in cash if the estimate was off.
Working with American One Source, there are no deposits and no premium audits. The workers compensation premium is billed to the penny, per pay period. At the end of the year there are no premium audits and no additional premiums due, giving you peace of mind and greater planning flexibility.