Benefits of joining a PEO’s Workers’ Comp Policy
If you’re currently working with a PEO or thinking about partnering with one you’ve probably noticed that Workers Compensation is one of the core services they offer. By entering into a co-employment arrangement, your business gains access to the PEO’s master Workers’ Comp policy, which means you don’t have to maintain a separate policy of your own.
6 Benefits of joining a PEO’s Workers’ Comp Master Policy
Cost savings
One of the biggest advantages is lower cost. Thanks to their scale, PEOs can typically offer Workers Comp rates that are 10–15% lower than what you’d pay on your own. Plus, they’ll ensure your employees are classified correctly, so you’re paying the right rates and avoiding unexpected adjustments down the line.
Multi-state coverage
A PEO’s master Workers Comp policy is already in place nationwide. That makes expanding into a new state seamless—just let your PEO know when you hire someone in a new location, and they handle the rest. The PEO will also ensure that employees are coded correctly. So if an employee is traveling monthly they won’t be incorrectly coded as an 8810 - desk employee -which helps you stay in compliance and doesn’t impact a potential claims payout or settlement.
Risk management support
Since the PEO shares in the risk of claims, they’re invested in keeping your workplace as safe as possible. They’ll help you identify risks, recommend improvements, and even assist in creating RTO programs. Their support team steps in during the claims process, investigating incidents and reducing fraud.
No deposits or audits
With a traditional Workers Comp policy, you pay an upfront deposit, estimate your payroll exposure, and then get audited at the end of the policy term resulting in a big bill (or refund) if your estimates were off. With a PEO, you pay-as-you-go based on actual payroll through their integrated system. No upfront deposits, no audits, no guesswork.
Transparent pricing
PEOs typically roll any additional administrative fees into the class code rate they charge and not a separate line item, so you won’t get hit with surprise fees later.
Options for higher risk industries
Some PEOs specialize in covering niche hard to insure industries, which can be difficult and expensive to insure on your own. If your business operates in roofing or construction, for example, working with the right PEO can give you access to competitive rates and coverage you might not otherwise qualify for.
Keep in mind 1099 contractors are typically covered but will require separate consideration. This is because the PEO is taking on the claims risk of the 1099’s but not collecting premiums in return (only W2 employees pay into the policy). PEO’s will assess the day to day duties of the 1099’s and will also have a W2 to 1099 ratio that they factor into their policy approval process.
