For many ranges, retailers and manufacturers, insurance is their second biggest expense behind payroll. It’s also important to remember that your workers’ compensation insurance premium is based on an estimated annual payroll. In times of fluctuating payrolls, something that can happen in times of crisis in which businesses may be closed or otherwise restricted in operations, it can pay to talk with your insurance policy holder and reevaluate this expense.

At the start of an insurance policy, a business will provide an estimated payroll based on the different jobs employees perform. That payroll estimate is multiplied by a rate specific to a job classification and a few other factors, including an experience modification, to come up with the estimated annual premium for the policy period.

Once the premium is established, the insurance company will set the payment terms for the premium to be paid. These terms typically range from 100 percent down, 50 percent down with one installment, 35 percent down with three payments or 25 percent down with five payments.

Many shooting sports businesses, more than 80 percent in fact, are insured with state funds/NCCI (National Council on Compensation Insurance) or assigned-risk pools. The payment plans for these policies often require the larger down payments and fewer payments for the balance. This has a real effect on the cash flow of a business.

If your policy is on installments, your premium payments will remain the same regardless of payroll fluctuations unless you contact your insurance agent or the company. If your payroll has dropped significantly due to an unexpected closure or other major interruption to your daily business, you should have your policy premium revised mid-term, which will allow your remaining premium payments to be reduced. You should also make this mid-term adjustment if your payroll has gone up — manufacturers hire additional staff to ramp up firearm production and FFLs add salespeople and compliance officers to meet a surge in demand — to avoid an additional premium at final audit. In either circumstance, if your insurance company won’t revise your policy, your insurance agent should step in and get quotes from other companies.

Evaluating your workers’ compensation premium doesn’t require a crisis or emergency to be valuable. For businesses that have seasonal operations or shifts in payroll over the year — outdoor ranges, for instance — having the ability to pay based on actual payroll is a very attractive option. This type of payment plan, offered by only a few insurance companies, is known as “payroll reporting.”

It’s important to know that shooting sports industry businesses have options when it comes to workers’ compensation insurance. It’s equally important to work with an insurance company that understands and supports this industry. Talk to your insurance agent and have them get quotes for your business.