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Bob:
Chaz Carrillo with the Holt Diamond Dale Agency is here. Chaz, it’s always great to see you.
Chaz:
Yeah. Thanks for having me back.
Mary:
Yeah, it’s always good to have you here. Now, when you work with businesses, is there an area of insurance that requires more information?
Chaz:
Well, right now it seems like I’m, I keep having the same conversation about a companies and their work comp insurance. It’s something that’s not really understood. People really don’t know how it works. And usually, uh, when they, when they have questions a little too late, something’s already gone wrong.
Bob & Mary:
Right. So break it down for us. What is worker’s comp?
Chaz:
So worker’s comp is designed to pay, uh, employees protect employees, uh, if they get injured on the job. So the pays part of their wages. It pays medical bills, uh, for work related injuries. And, uh, the policy is designed to protect actually the employee and the employer. Um, so it’s actually a really good program for both parties, uh, and make sure everybody gets taken care of.
Mary:
What’s the hot button issue with workers’ comp?
Chaz:
Well, right now I would say it’s the, the where the nobody likes to hear, which is audits.
Chaz:
Um, and so right now, uh, the IRS has a definition of what an employee is and then the state of Michigan has a definition of what an employee is when it comes to work comp. And that’s not the same thing. So, uh, some people, especially contractors and small business owners that hire people notice, so a 10, 99 them, they’re not really an employee and I don’t need to have any work comp coverage there. Well then on their audit, um, they, and they may even have their own business name, but they, uh, on their audit, that person doesn’t carry work comp, uh, insurance themselves, and then they’re going to be required to pay for last years of, uh, last year’s payroll for whatever is owed on that premium plus the pre press now the next year. So, I mean, I’m looking at audits that are anywhere from 5,000 to a hundred thousand dollars for contractors because they’re not getting the proper paperwork from the subcontractors.
Chaz:
Uh, and they’re also just getting kind of stuck in the middle. Maybe they have a new auditor and he’s going to be more by the book than the last auditor and that, and he’s been doing it the same way for five or 10 years, but now he gets caught and um, and then that big bill comes,
Bob & Mary:
ah, whoa.
Bob:
So how do you help businesses with this issue?
Chaz:
Well, really a good commercial insurance agents should be on top of this, making sure that he’s open communication throughout the year, that if you’re bringing new employees on that we make sure that we add that payroll right away to your policy so you don’t get a big bill at the end. I always tell people that we’re just trying to make it so that you get a small check at the end instead of a bill because that’s a much better conversation. Yeah,
Bob & Mary:
absolutely. Yeah. Right. We’re really doing people a favor by getting this information out there.
Chaz:
Another part of that is making sure when the use of contractors that they get the proper certificates and pieces of information from them so they don’t get hit with that with that bill, either.
