Chapter 14

Workers' Compensation statutes require employers to provide benefits to all employees unless an employee is exempt. Some states exempt workers of employers with fewer than

1-3 employees.

Cancellation

1.If the policy is cancelled by the insurer, the insurer must provide written notice to the insured, stating when the cancellation will take effect 2. Generally, the insurer must give the insured at least 10 days' written notice 3. The policy will end on the day and time stated in the cancellation notice. 4.This policy will automatically comply with any changes in the law regarding cancellation.

Death and Survivor Benefits (Funeral Expense Benefit) -

A statutory maximum amount, varying from state to state, is provided as a burial allowance. Survivor income benefits are a percentage of the deceased worker's wages and are also provided to the surviving spouse (and usually end at remarriage); and/or children (until age 18, and sometimes longer if a full

However, some states exempt workers based on job duties.

Agricultural workers, such as farm and ranch laborers, Domestic employees, Casual laborers, Independent Contractors , Sole - Owners, Partners, and Corporate Officers

Insurer's Manuals -

All premiums are determined by the insurer's manuals of rules, rates, rating plans, and classifications as authorized by state law.

Locations -

All workplaces, locations, and states listed in the Information Page.

State -

Any state in the United States, including the District of Columbia. An injured employee is entitled to benefits provided by the state where the injury occurs.

Employment Covered

Because Workers' Compensation insurance responds to workplace injuries, it only provides coverage if an employment relationship exists between the employer and the injured person.

Who is Insured -

Establishes that the employer is the insured.

The Policy -

Establishes that the policy is a contract between the employer and the insurer. The terms of the policy may not be changed or waived, except by endorsement.

Part Five -

Premium

Fellow Servant Rule -

Removed the employer's negligence if a fellow employee contributed in any way to the loss.

Contributory Negligence -

Used to argue that the employee was partially at fault and therefore was not eligible to recover benefits from the employer.

The Second Injury Fund pays compensation on behalf of

an employer to an employee who has already suffered a prior disabling injury, and now sustains a subsequent injury, and the combination of the two injuries creates a greater disability than the second injury would have created by itself.

In order to be covered under the Workers' Compensation policy,

an injury must arise from, and be related to, the injured worker's job duties. The policy also provides benefits for employers' liability, which responds to an injured worker's allegations that the insured business was negligent. Workers' Compensation benefits are NOT provided for injuries that are not related to employment.

While most Workers' Compensation statutes compel employers to provide coverage, they also protect

employers from being sued. If an employer provides Workers' Compensation insurance in compliance with state law, its employees cannot sue it for workplace injuries.

Note: Deposit premium is the advanced premium charged when coverage is

issued. Deposit premium is based upon estimated payroll.

Scheduled Benefits -

A schedule of benefits applies to specific permanent partial injuries, such as a dollar amount for the loss of an eye, or a hand. These benefits are usually paid in addition to other benefits. Disablility Income Benefits

Self-Insurance Groups and Employer Plans

All states, except North Dakota and Wyoming, allow employers to self-insure upon satisfying certain statutory requirements that are a guarantee of their ability to meet their obligations. Large employers are sometimes attracted to self-insurance plans because losses can be predictable and benefits are capped by statute.

Assigned Risk Plan

Also known as the Residual Market Plan, many states offer employers unable to purchase coverage in the voluntary market the opportunity to obtain coverage in a Workers' Compensation Assigned Risk Plan. Typically, insurers who write Workers' Compensation insurance in the voluntary market in the state must participate in the state's assigned risk plan.

Temporary Partial -

An injury after which an employee is able to do some work, but is unable to earn his/her usual wage until full recovery. Benefits are usually calculated as a percentage of the difference in the wages.

Permanent Partial -

An injury after which an employee is able to do some work, but will never fully recover. An employee can still earn a wage, but not as much as he/she would have earned if the injury had not occurred. ^ONLY ONE WITH SCHEDULED BENEFITS

Permanent Total -

An injury that prevents an employee from being able to do any work for the rest of his/her life. Benefits are subject to the same weekly benefit percentage and the same minimum and maximum limits as Temporary Total. In most states, benefits are paid for life.

Temporary Total -

An injury, from which an employee is expected to recover and return to work, but is unable to do any work while recovering. Benefits begin after a waiting period of several days. Retroactive benefits will be paid back to the initial date of disability if the disability lasts beyond a certain period. The benefit amount is a percentage of the employee's average weekly wage, subject to minimum and maximum limits. In most states, it is 66 2/3%.

Part Six -

Conditions

The Insurer Will Also Pay - The following amounts, in addition to other amounts payable:

Expenses incurred by the insured, at the request of the insurer, but not loss of earnings, Premiums for appeal bonds, Litigation costs taxed against the insured, Interest on a judgment against the insured, Expenses incurred by the insurer

Benefits Provided (Determined by State Law)

Each state determines benefit levels, benefit types, and definitions of disability. The following are common definitions:

Once Workers' Compensation laws became effective, all work related injuries and occupational diseases became the responsibility of the

Employer. This insurance became the sole source of remedy and the employee no longer had the right to sue the employer for damages.

The Insurer Will Also Pay -

Expenses incurred by the insured, at the request of the insurer, but not loss of earnings, Premiums for appeal bonds, Litigation costs taxed against the insured, Interest on a judgment against the insured, and Expenses incurred by the insurer

Employers liability pays all sums for which the insured is legally obligated to pay:

For injuries to employees that arise out of employment, but claimed against the insured in a capacity other than as employe, For care and loss of services, For consequential injury to dependents of an injured worker, For damages claimed by a third party as a result of a worker's injuries

The policy Workers' Compensation contains the following parts:

General Section Part One - Workers' Compensation Insurance Part Two - Employers Liability Insurance Part Three - Other States Insurance Part Four - Your Duties if Injury Occurs Part Five - Premium Part Six - Conditions

Compulsory -

In jurisdictions where Workers' Compensation benefits are mandated by state law, employers are required to provide Workers' Compensation benefits to their employees—either via insurance or self-insurance. If the provisions of a policy do not comply with the state law, the insurer is required to provide all legally mandated benefits.

Elective -

In jurisdictions where Workers' Compensation benefits are not mandated by state law, employers have the choice to accept or reject state Workers' Compensation laws.

Part Three - Other States Insurance

Many employers have operations in multiple states. This policy is designed to provide coverage for as many states as the laws permit. Employers with operations in the monopolistic states must purchase coverage directly from the state entity that sells this coverage.

Statutory Provisions -The following apply as required by law

Notice of an injury must be given promptly, Bankruptcy of the insured does not relieve the insurer of its duties under the policy, The insurer is liable to any person entitled to benefits under the policy, Under the Workers' Compensation law of the applicable state(s), jurisdiction over the insurer is jurisdiction over the insured, The policy will conform to Workers' Compensation laws that apply to benefits and assessments payable under the policy, such as taxes, special funds, Terms of this policy that conflict with state law are automatically changed to conform

Federal Workers' Compensation Laws governing certain types of employees:

The Federal Employers Liability Act (FELA) applies to interstate railroad workers, The U.S. Longshoremen and Harbor Workers' Compensation Act applies to workers who load, unload, build, or repair ships (but not to the crew of the ship), The Jones Act or Merchant Marine Act of 1920 applies to sailors injured by the negligence of others, The Federal Employees Compensation Act applies to all U.S. civilian employees, Defense Base Act applies to workers on military bases outside the United States

Rehabilitation Benefits -

Physical therapy and vocational training are utilized with the objective of returning the injured employee to work as soon as possible. These benefits are usually paid by the insurer; however, some states have established special state funds to pay for rehabilitation costs that are funded by taxes levied against insurers and self-insureds.

An employer-employee relationship exists if the employer:

Retains the right to direct the way work shall be completed, Supplies the necessary equipment and tools to complete the work, Determines the work hours, Determines the end results of the work to be completed, Controls the frequency and timing of compensation for work

Sole Representative -

The First Named Insured will act on behalf of all insureds, receive any cancellation notice, and unearned premium.

Limits of Liability -

The Limits of Liability shown on the Information Page are the most the policy will pay for all damages covered by the policy for bodily injury by accident or disease.

The following information must be provided in the endorsement:

The class of employees to be covered The state of employment

Classifications -

The classifications shown in the Information Page are assigned based on an estimate of the exposures the insured would have during the policy period.

Records -

The insured will keep records of information needed to calculate the premium.

Premium Payments -

The insured will pay the entire premium when due.

Workers' Compensation and Employers Liability Insurance Policy

The employers liability section of the policy doesn't pay for medical expenses incurred by the injured employee. In order for the policy to pay, the insured MUST be legally liable for injuries and damages sustained by an employee that are not addressed by Workers' Compensation statute or that are sustained by third parties and/or dependents of the injured worker.

By the Insured -

The final premium will be based on the time the policy was in force and increased by the insurer's short rate cancellation table.

By the Insurer -

The final premium will be calculated pro rata for the time the policy was in force.

Final Premium -

The final premium will be determined, after this policy ends, by using the actual, not the estimated, premium basis and the proper classification that applies by law. If cancelled:

Actions Against the Insurer - There will be no right to actions against the insurer unless:

The insured has complied with all terms of the policy,The amount owed by the insured has been determined with the insurer's consent or by trial and final judgment

Transfer of the Insured's Rights and Duties -

The insured is not allowed to transfer any rights and duties under the policy without the insurer's written consent.

Payment the Insured Must Make (This is the exclusion section of the policy) -

The insured is responsible for paying benefits in excess of those provided by the Workers' Compensation law,

Inspection -

The insurer has the right, but not the obligation, to inspect the insured's workplace. Inspections are for purposes of underwriting and determining premium and not as a guarantee of safety or compliance with state or other laws.

Audit -

The insurer may audit records pertaining to the policy at any time and for up to 3 years after the policy period ends.

Recovery From Others (Subrogation) -

The insurer reserves the right to recover its payments from anyone liable for causing injury.

The Insurer Will Defend -

The insurer will defend any claim for benefits payable by this insurance. The insurer reserves the right to investigate and settle claims.

Other Insurance -

The insurer will not pay more than its share of the benefits and costs covered by the policy.

The Insurer Will Pay -

The insurer will pay the sum, up to policy limits, and the insured must legally pay for damages because of bodily injury to employees.

The Insurer Will Pay -

The insurer will promptly pay the benefits due.

Workers' Compensation Law -

The law of each state or territory named in the Information Page.

Remuneration -

The premium for each work classification is determined by multiplying a rate and a premium basis. The premium basis is employee remuneration.

Part One - Workers' Compensation Insurance How This Insurance Applies -

This insurance applies to bodily injury by accident, bodily injury by disease, or bodily injury resulting in death., The accident must occur during the policy period, The bodily injury must be caused or aggravated by the conditions of employment

Assumption of Risk -

This defense placed all the risk on the employee as being responsible for knowing the work conditions prior to employment.

Voluntary Compensation Endorsement

This endorsement is used when an employer wishes to provide Workers' Compensation benefits to employees, although the law does not require the employer to provide coverage

Medical Benefits -

Unlimited coverage for all necessary medical (including hospital) expenses related to the covered injury that occurred during the policy period.

The Workers' Compensation policy provides compulsory insurance benefits that coincide with the

Workers' Compensation acts and statutes of each state.

The National Council on Compensation Insurance (NCCI) developed the

Workers' Compensation and Employers Liability Insurance Policy, which we'll refer to as the Workers' Compensation policy. It is the industry standard policy in most states. Each of the states has its own laws pertaining to the statutory liability of employers for their employees.

Competitive States -

Workers' Compensation insurance is available through private insurers as well as any state fund that may exist.

Monopolistic States -

Workers' Compensation insurance is only available through a state fund.

Workers' Compensation insurance addresses different types of

Workers' Compensation laws, exempt workers, federal programs, Workers' Compensation benefits, employer's liability benefits, and the policy itself.

Some states, in lieu of establishing assigned risk plans, establish state insurance funds as an

alternative for an employer to purchase coverage. The fund operates as a public insurer (sponsored and controlled by the state) that competes with private insurers and issues a policy similar to those issued by private insurers conforming to the Workers' Compensation laws of the state. Employers may purchase coverage directly from the Fund, and licensed brokers may also place business with the Fund.

Part two of the policy, Employer's Liability, provides insurance for

bodily injury and other damages for which the insured becomes liable outside of Workers' Compensation statute and occupational disease laws. If someone is permitted by law to sue the insured for negligence or other tort damages, this part of the policy applies.

The employer is responsible only for

compensation that would have been paid had the second injury occurred without the existence of the prior injury, and the fund pays the difference.

An occupational disease must arise out of the

course of employment and be caused by conditions that are particular to that employment.

The Workers' Compensation policy, like other policies, contains various parts that address

coverages and conditions

If an employer violates state law by NOT providing Workers' Compensation benefits, the Workers' Compensation statute

doesn't protect the employer from lawsuits. Essentially, an employer doing business without providing Workers' Compensation benefits is exposing itself to unlimited liability for workplace injuries PLUS the fines and penalties imposed by the state for violating the law.

Employers must obtain a Self-Insurance Certificate and may also purchase

excess insurance or reinsurance. Some states also require the employer to purchase a surety bond.

Disability Income Benefits

generally limited to the period of disability.

This fund is designed to encourage employers to hire people with disabilities by

limiting their liability for subsequent injuries. The second injury fund is usually funded by assessments against insurers and self-insurers, but may also be financed through general state revenues.

Payment of Workers' Compensation benefits is made

regardless of the negligence of either the employer or the employee. Even if an employee contributed to his own injury, benefits must be provided.

If the insurer makes any excess payments, the insured must promptly

reimburse the insurer.

The employees must waive their

right to sue and accept coverage under the endorsement.

If an employer chooses to reject the Workers' Compensation laws and an employee is injured, the employee may

then file a claim or lawsuit against the employer for injuries; and the employer is denied the use of common law defenses, such as assumption of risk, contributory negligence, and negligence of a fellow employee.

Workers' Compensation insurance is the exclusive remedy for

workplace injuries. This means an injured worker cannot obtain other insurance for workplace injuries or their related medical expenses and lost wages. Injured workers are not permitted to sue an employer for injuries if covered by Workers' Compensation insurance.