risk financing

Guaranteed Cost

RISK FINANCING FOR

BUDGET-CONSCIOUS MOTOR CARRIER

Guaranteed Cost policies help motor carriers keep their Workers Compensation and trucking insurance costs stable. It is a risk financing approach Great West offers that adds predictability to your budgeting and cash flow.

When you choose a plan that guarantees your premium cost, you know exactly how much you’ll spend each year on your insurance. Your policy is priced at a flat rate, and you pay a fixed premium annually.

That makes this plan a popular option for small and mid-sized motor carriers that are budget conscious.

WHAT ARE THE ADVANTAGES OF

A GUARANTEED COST POLICY?

There are several benefits that make this option attractive, especially if you are a smaller motor carrier. The biggest advantage is budgeting predictability.

  • You pay a fixed premium regardless of the number of losses that occur during your policy term.
  • You have the convenience of knowing exactly what you will pay each month.
  • Your policy is not subject to adjustment due to the number of claims or losses that occur during your policy’s term. (The only thing that could change your premium is a post-term audit adjustment based on your actual payroll.)
  • There are no deductibles to meet with this plan. Your policy covers the full expenses associated with claims.
  • Your financial risk from a big claim is greatly reduced because the insurance carrier takes on all the risk and pays all the losses.
  • When you have a Worker’s Comp claim, the seasoned, in-house team of Great West claims experts provides administrative and claims services, just as we would with a traditional Workers Comp plan. 
POTENTIAL DRAWBACKS OF A

GUARANTEED COST PLAN

While gaining budget predictability has a lot of advantages, there are a few potential drawbacks to consider as well.

  • Your premium is paid upfront, so you forgo any of the cash flow benefits of monthly payments.
  • Your premium won’t go down during your policy term, even if you have fewer or less costly claims than you’ve historically experienced.
  • The convenience and predictability of this type of risk financing tool tend to come with a higher annual premium.
WHAT IS A

POST-TERM AUDIT ADJUSTMENT?

When you choose a Guaranteed Cost for your workers compensation policy, your trucking company agrees to pay a premium based on a flat-rate estimate of your payroll at the beginning of your plan period. After your plan expires, we’ll do an audit of your actual payroll and your final premium will be adjusted accordingly.

How do adjustments work?
  • If your payroll is less than you estimated, you receive a refund of the difference between the estimated premium and the audited premium.
  • If your payroll is more than estimated, your trucking company pays the additional premium to the insurance carrier.
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WHO SHOULD CONSIDER

A GUARANTEED COST POLICY?

Many motor carriers consider this type of risk financing tool when they’re looking for “first dollar coverage.” This means that when your trucking company has a claim, the insurance policy responds without you having to pay a deductible. The insurance carrier assumes all the risks and pays for all losses associated with the claim.

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GET COVERAGE FROM

A COMPANY THAT UNDERSTANDS TRUCKING

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WORKERS COMPENSATION

RISK FINANCING OPTIONS

While a Guaranteed Cost Workers Compensation policy may be a great fit for a small to medium-sized motor carrier, it may not be the best fit if you’re a larger trucking company with the financial stability to assume more risk in exchange for lower premiums. That’s where the experienced underwriters at Great West can help. Our team can tailor your risk financing options to fit your business’s needs.

 

EXCESS WORKERS
COMPENSATION PLANS

If your state has granted your trucking company self-insured status, an Excess Workers Compensation policy can be an attractive risk financing option to limit your financial liability. Excess Workers Comp reimburses your company for claims that exceed your authorized self-insured maximum, up to the limits of the policy. The policy caps your financial liability and out-of-pocket costs, protecting your trucking company from large payouts.

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LARGE DEDUCTIBLE
PLANS

A Large Deductible plan is a Workers Comp option that can be financially advantageous for large motor carriers. If your business is financially stable and you are focused on loss control measures, it may be an attractive risk financing option. With this plan, your trucking company retains more of the risk associated with workplace injury claims by selecting a higher deductible — in exchange for lower premiums.

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RETROSPECTIVE RATING PLAN

A Retrospective Rating Workers Comp plan incentivizes companies to control losses through safe operations. It can be a great fit if you’re a large motor carrier that is dedicated to workplace safety and has a reliable claims history. After the policy expires, an adjustment is made to your premium based on claims that occurred during its term. The premium adjustment can go up or down based on the losses you had. The plan rewards companies that have few claims with reduced premiums.

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EXPLORE YOUR OPTIONS

GUARANTEED COST PLANS

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This summary is intended for informational purposes only and does not replace or modify the definitions or information contained in any insurance policy or declaration page, which controls all coverage determinations. Terms and conditions may vary by state, and exclusions may apply.

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