When an employee is injured while working on your company’s property, they will file a workers’ compensation claim. The insurance covers medical bills and a portion of the employee’s salary while they are recovering. There are other expenses related to the claim as well.
What Are Claims Handling Costs?
The claims handling expenses are those costs that are a result of the claim being processed. These expenses include preparing and handling the paperwork associated with the claim. Registration fees and insurance adjuster costs also fall under the definition of claims handling fees.
Many professionals may be involved in processing the claim, including accountants, investigators and consultants. The expenses they incur are known as allocated expenses.
What Are Unallocated Costs?
Unallocated expenses are not charged directly to the claim by the insurance company. These are costs incurred by the insurer for routine operations in the claims department. Things like insurance company salaries and overhead expenses are not incurred for a specific claim but are considered part of the overall operations expenses.
Any claim that requires a great deal of preparation and presentation may take an extended period of time to process. This can result in a delay of payment to the policyholder.
As a business owner, it is important to understand the different types of handling fees so there is no confusion during the claims process.