7 tips to lower your Alabama workers’ compensation premium

You have a lot of responsibilities as an employer, one of which is taking care of your employees and providing a safe, healthy workplace. Your employees are one of your business’s biggest assets, and you really don’t want to see any of them get hurt on the job. Just the thought is scary. Of course, you have Alabama workers’ compensation insurance to provide for the employee’s medical bills and lost wages so that financially they’ll be cared for, and it’s worth every penny. But there are a few things you can do to get the coverage you need at a lower rate. We’ve got some tips to help you manage the expense of your workers’ compensation insurance.


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1. Improve safety at your workplace.

Now, a simple way to manage your workers’ comp costs is to avoid workplace accidents by improving safety. Your insurance rates could go up if you have a lot of claims because your business is more of a risk to insure.

One way to get started with establishing a high standard of safety is to train all of your employees. Spend plenty of time training your new employees so they learn how to do their job safely. And it’s a good idea to conduct safety meetings with your more seasoned employees, too, to discuss concerns and go over new concepts. Safety is an ongoing team effort.

In addition to training, here are some other tips:

  • Take steps to reduce or minimize hazards around your workplace.
  • Choose a non-slip flooring material to reduce the chance of slips and falls.
  • Try to reduce distractions
  • Make your workplace ergonomic. Ergonomics means customizing a workplace to the task performed there to minimize the risk of injury or strain.
  • Teach employees to lift properly so they can avoid back injuries and strain.

2. Have a return to work program.

A return to work program will help an employee who has suffered a job-related injury or accident to come back to work sooner. A return to work program is basically having tasks that are tailored to the employee and what they’re able to manage while they’re getting better. For example, an employee who broke an arm would be assigned meaningful tasks that they can accomplish one-handed.

Pro tip: Check in with the employee regularly to ensure that they’re getting the medical care and support they need while they’re recovering.

Now, a return-to-work program is not just a way to profit more by forcing an injured person to come back to work on the double. It’s a way to allow them to gradually come back to work and take on their job responsibilities. You want to assign the employees tasks that are meaningful and that contribute to your business’s success. You don’t just want them doing busy work that’s not actually accomplishing anything. The employee should feel like they’re still a valued team member.

You can lower your workers' compensation premium by improving safety.


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3. Take some time to consider your workers’ compensation mod.

And now for a brief definition.

A mod, or modification factor, is a number that insurance companies use to figure out how much of a risk you are to insure. They calculate your workers’ compensation mod by comparing your business to others in the same industry. It tells the insurer if your losses or claims are below, at, or above the average for your industry (the average is what’s expected for your industry based on data.) Where does this “data” come from? Most states use statistics collected by the National Council on Compensation Insurance.

So – why does your mod matter?

Your mod has an influence on your rate because it indicates if your business is riskier than normal. The riskier you are, the higher your workers’ compensation premiums could be.

  • If your mod is below 1.0, you have a credit – which is good because it means your losses are below average.
  • If you mod is above 1.0, you have a debit – which means that your losses are above average.

In short – if your mod is below 1.0, you will probably get better Alabama workers’ comp rates. If it’s above 1.0, your rates could be significantly higher. 

4. Conduct an investigation of all accidents and near-misses.

If there’s an accident or near-miss, it’s time to unleash your inner Sherlock Holmes and investigate.

Inspect the area where the accident occurred and look for clues that point to exactly what happened and why. Speak with employees who witnessed the accident and see if they can help you by explaining what they saw and heard. Keep plenty of notes – it’s important that you have a thorough and organized report of your investigation and your findings.

Pro tips: Try to launch your investigation within 48 hours. Your witnesses will be able to remember the incident more clearly.

And that takes us right into our next step…

5. Take steps to prevent another accident or near-miss.

Figure out what you can do to keep similar accidents and close calls from happening again. Talk to employees to ask for their suggestions and concerns. Identify potential causes for the accident and neutralize them to keep everyone safe and prevent future workers’ compensation claims.

6. Report accidents promptly if they require reporting.

If the inquiry has to be reported to the Occupational Health and Safety Administration (OSHA), be sure to do so as soon as possible. Filing the report quickly allows the ensuing investigation and claim get underway. Prompt claims reporting helps the entire process go more smoothly – and there might be a legal time limit for reporting certain injuries.

OSHA and the Department of Labor may need you to complete several important reports based on Alabama’s worker’s comp laws. Figure out what paperwork you legally have to complete and get it submitted.

Pro tip: Make sure your employees know that they need to tell their supervisor, manager, or you about any workplace accident or injury as soon as they can.

7. Go over your payroll.

Your job classifications and payroll need to be accurate so that you’ve got the right workers’ compensation insurance to fully cover your business.

It’s important to uphold a high standard of safety at your Alabama business to proven accidents and injuries. Your employees are an invaluable part of your business. And improving safety at your business can also help you lower your workers’ comp costs. So, go forth and improve safety in your business.


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You can also save money on Alabama worker’s compensation insurance by shopping for rates. Our team of insurance experts would love to help you find the best coverage at the best rate so that you can have peace of mind and get back to running your business. To get your Birmingham business insurance quotes, all you have to do is fill out our online form or give us a call today.

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