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REVIEW YOUR POLICY TO SAVE MONEY!
Reviewing your workers' compensation policy immediately after receipt can help you save money and avoid coverage gaps. This article describes many of the terms you should look for. The declarations page of your workers' compensation policy provides basic yet vital information on your policy. It identifies the insured and your location. It also identifies the insurer, type of policy, policy number and effective date, coverages included and information on premiums. - Check your organization's name and address as listed. They should match your organization's legal name and address exactly to avoid potential coverage problems. - If this is a renewal policy, the policy number should match the number on your old policy. - Check the effective date to ensure you won't have a coverage gap after your old policy expires. The declarations page also lists coverages the policy includes. Most workers' compensation policies have two parts: workers' compensation insurance (Part 1) and employer's liability (Part 2). Workers' compensation insurance covers your obligation to provide medical care and lost-time payments to injured workers, as required by state law. Unlike other types of insurance, workers' comp covers the full extent of your liability, with no limits. - Although optional, most employers will want employer's liability insurance (Part 2). This covers you for an employee's work-related bodily injury or illness claims that are not covered by state law. It also covers claims from third parties related to your employee's work injury. This can include a spouse's suit for loss of consortium or third party's suit seeking relief from liability for your employee's injury. Employer's liability insurance has dollar limits. - Employers with workers in other states will want "other states" coverage. Verify that all states in which you do business are listed, otherwise you might have to pay a workers' comp claim out of pocket. - A four-digit numerical code found on the declarations page indicates the category of work performed by your employees, or their occupational classification. - Check your occupational classification code, which reflects workers' relative injury risk and determines the rate you'll pay to insure them. An incorrect code could lead to overpayment or underpayment. Underpayment can prove painful later: if an audit reveals the error, you could face a large bill for premiums owed. - Your policy shows other figures relating to premiums, including "premium basis," "base rate" and "interim billing rate." - The premium basis equals estimated annual payroll for employees covered by the policy. A too-high estimate could mean you pay too much for your coverage; an estimate that's too low could cause you to receive a bill for premiums owed after audit. - The base rate signifies the rate the insurer charges to cover employees in your occupational class, before any discounts or rate modifications, per $100 of payroll. The interim billing rate reflects adjustments to this rate for experience or discounts; it could be higher or lower than the base rate. The insurer will multiply your premium basis (or payroll) by this rate to calculate your final estimated premium for the year. - Compare your base rate and interim billing rate to those on your last policy. Are they similar? If not, ask your insurer for an explanation. Changes could reflect a change in your claims experience or a change in rates for your entire occupational class. - If cash flow is a concern, you can ask your insurer if you can pay a smaller deposit premium and make monthly payments. We can help you review your policy and work with you to control your workers' compensation costs. Please contact the PCOC Insurance Program department at Jenkins Insurance Services at (877) 860-7378. |
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