Chapter 14 Workers' Compensation Insurance

If an employer cannot obtain Workers' Compensation coverage for his employees, _____ is an alternative.

Assigned Risk 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, insurance company's who write Workers' Compensation insurance in the voluntary market in the state must participate in the state's assigned risk plan. 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 insurance company (sponsored & controlled by the state) that competes with private insurance company's & issues a policy similar to those issued by private insurance company's conforming to the Workers' Compensation laws of the state. Employers may purchase coverage directly from the Fund & licensed brokers may also place business with the Fund.

Assigned Risk Plane (Residual Market Plan)

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

Assumption of Risk

The insurance company may ____ records pertaining to the policy at any time & for up to 3 years after the policy period ends.

Audit

Each state determines benefit levels, benefit types & definitions of disability. The following are common definitions: Medical Benefits Disability Income Benefits Rehabilitation Benefits Death & Survivor Benefits (Funeral Expense Benefit) Second Injury Fund

Benefits Provided (Determined by State Law)

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

By the Insurance Company

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

By the Insured

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

Cancellation

Those whose work is non-recurring or irregular.

Casual laborers

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

Classifications

______ are assumption of risk, contributory negligence, & negligence of a fellow employee.

Common-law defenses

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

Competitive States

______ insurance is only available through private insurance company's & if available, a state fund.

Competitive Workers' Compensation

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 insurance company is required to provide all legally mandated benefits.

Compulsory

A _____ law requires employers to provide benefits to their employers with insurance or demonstrate the ability to provide required benefits. When complying with a compulsory law, employers cannot be sued for workplace injuries.

Compulsory Workers' Compensation

Compulsory Elective

Compulsory vs. Elective

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. 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 & penalties imposed by the state for violating the law.

Compulsory vs. Elective

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

Contributory Negligence

_____ are those that arise out of, & in the course of, employment. This means: the injury must occur while the employee is at work or working, the employee is working the hours he/she is designated, or expected, to work, the employee is performing the duties that he/she was employed to do, the injury must arise from a risk that is reasonably related to employment. The employer can deny benefits to an employee who intentionally injures himself/herself or if the injury results from intoxication.

Covered Injuries

_____ are those that occur while the employee is at work, & the injury results from a risk that is reasonably related to employment.

Covered injuries

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 & are also provided to the surviving spouse (& usually end at remarriage); &/or children (until age 18, & sometimes longer if a full time student).

Death & Survivor Benefits (Funeral Expense Benefit)

Benefits are generally limited to the period of disability.

Disability Income Benefits

When an employee is injured by a product manufactured by the employers, the Employers Liability will provide coverage under _____.

Doctrine of Dual Capacity

In jurisdictions where Workers' Compensation benefits are not mandated by state law, employers have the choice to accept or reject state Workers' Compensation laws. If an employer choose to reject the Workers' Compensation laws & an employee is injured, the employee may then file a claim or lawsuit against the employer for injuries; & the employer is denied the use of common law defenses, such as assumption of risk, contributory negligence & negligence of a fellow employee.

Elective

An _____ allows employers to choose whether to accept or reject state Workers' Compensation laws. If rejecting Workers' Compensation laws, an employer may be sued by an injured employee, & the employer is denied the use of common-law defenses.

Elective Workers' Compensation law

Employment Covered Exempt Workers Covered Injuries Occupational Disease

Employment Conditions

Because Workers' Compensation insurance responds to workplace injuries, it only provides coverage if an employment relationship exists between the employers & the injured person. An employer-employee relationship exists if the employer: retains the right to direct the way work shall be completed, supplied the necessary equipment & tools to complete the work, determines the work hours, determines the work hours, controls the frequency & timing of compensation for work. Another class of workers commonly employed are independent contractors over whom the employer does not retain the rights to control them, is not require to withhold taxes from any compensation, & who commonly work for multiple employers. Agents need to refer to their state's Workers' Compensation Law to determine how their state defines an independent contractor. For example, many state laws consider independent contractors who work solely for one employer & in the same trade to be statutory employees.

Employment Covered

Liability assumed under a contract. Punitive damages awarded because an employee was employed in violation of law. Bodily injury to an employee while employee in violation of law. Any obligation imposed by any Workers' Compensation, Occupational Disease, Unemployment Compensation, or Disability Benefits law. Bodily Injury intentionally caused by the insured. Bodily injury caused outside of the United States, its territories & possessions or Canada. (Injury to a resident temporarily outside of these areas would be covered.) Damages arising out of coercion, criticism, defamation, evaluation, reassignment, discipline, harassment, humiliation, termination of, or discrimination against any employee, as well as arising from any personnel practices, policies, acts or omissions. Bodily injury arising from work that falls under federal jurisdiction. Fines or penalties imposed for violation of federal or state law. Damages payable under the Migrant & Seasonal Agricultural Worker Protection Act.

Exclusions

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 to 3 employees. Some states exempt workers based on job duties. Examples include: Agricultural workers, such as farm & ranch laborers, Domestic employees, casual laborers, independent contractors, sole.

Exempt Workers

Worker's Compensation insurance is only available through a state fund.

Monopolistic States

In addition to state Workers' Compensation programs, federal laws governing certain types of employees: The Federal Employer's Liability Act (FELA) applies to interstate railroad workers. The U.S. Longshoremen & 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.

Federal Workers' Compensation Laws

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

Fellow Servant Rule

The ____ will be determined, after this policy ends, by using the actual, not the estimated, premium basis & the proper classification that applies by law. If cancelled: By the Insurance Company & By the Insured.

Final Premium

______ is the sole representative under the policy.

First Named Insured

The Policy Who is Insured Workers' Compensation Law State Locations

General Section

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.

How This Insurance Applies

This insurance applies to bodily injury by accident, by disease, or resulting in death. The bodily injury must: arise out of, & in the course of, employment, take place during the policy period, be caused by the conditions of employment. The employment must be necessary to the work described in the Information Page. Any suits for damages for bodily injury must occur in the United States, its territories & possessions or Canada. The insurance protects the insured against damages under the Doctrine of Dual Capacity, which applies when an employee is injured by a product the employer manufactures.

How This Insurance Applies

Plumbers, electricians, & landscapers who work under contract for more than one employer. The definition of independent contractor varies by state, as do requirements for Workers' Compensation & exempt status.

Independent Contractors

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

Inspection

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

Insurance Company's Manuals

The Employers Liability does NOT pay for _____ for which the insured is legally obligated to pay

Intentional Injury by the employee

_____ insurance is only available through a state fund.

Monopolistic Workers' Compensation

_____ Workers' Compensation program applies to sailors injured due to the negligence of others.

Jones Act

Under Workers' Compensation insurance, the insured is responsible for paying benefits for: ______-

Knowingly hiring an employee in violation of the employment law

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.

Limits of Liability

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

Locations

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

Medical Benefits

______ type of Workers' Compensation laws is available through a state fund.

Monopolistic

An ______ must arise out of the course of employment & be caused by conditions that are particular to that employment. For example, an employee who contracts a cold in the winter may not be eligible for benefits because the cold could have been contracted while the employee was not working. However, a coal miner who develops respiratory problems will likely be eligible for benefits.

Occupational Disease

An ____must arise out of the course of employment & must be caused by conditions that are particular to that employment.

Occupational diease

The insurance company will not pay more than its share of the benefits & costs covered by the policy.

Other Insurance

Assigned Risk Plane (Residual Market Plan) Self-Insurance Plans & Employers Groups

Other Sources of Coverage

Insurance Company's Manuals Classifications Remuneration Premium Payments Final Premium -By the Insurance Company -By the Insured Records Audit

Part Five - Premium

The insured's duties if injury occurs are to: provides for immediate medical services required by law, give the insurance company the names & addresses of the injured persons & any witnesses, promptly forward all notices, demands & legal papers related to the injury to the insurance company, cooperate with the insurance company's investigation, do not interfere with the insurance company's subrogation rights, do not voluntarily make any payments, assume obligations or incur expenses.

Part Four - The Insured's Duties if Injury Occurs

How This Insurance Applies The Insurance Company Will Pay The Insurance Company Will Defend The Insurance Company Will Also Pay Other Insurance Payment the Insured Must Make (This is the exclusion section of the policy) Recovery From Others (Subrogation) Statutory Provisions

Part One - Workers' Compensation Insurance

Inspection Transfer of the Insured's Rights & Duties Cancellation Sole Representative

Part Six - Conditions

Many employees 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. Otherwise, agents can adapt this policy for their customers to include very broad national coverage as long as the Information Page shows the states in which they have active operations & may have potential exposures. The coverage part sets forth the guidelines for providing this "other state" coverage in the policy. This insurance applies only if more than one state is listed, & must be within the policy territory. (Monopolistic states may not be listed here.) If the insured begins work in a state listed on the Information Page after the effective date of the policy, the insurance will apply if other insurance does not exist. The insurance company will reimburse the insured for any payments made where insurance applies, & the insurance company is not allowed to pay directly. The insured must notify the insurance company within 30 days days when an employee works in a state not listed in the Information Page.

Part Three - Other States Insurance

Part two of the policy, Employer's Liability, provides insurance for bodily injury & other damages for which the insured becomes liable outside of Workers' Compensation statute & 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. How This Insurance Applies The Insurance Company Will Pay Exclusions The Insurance Company Will Defend The Insurance Company Will Also Pay Other Insurance Limits of Liability Recovery From Others (Subrogation) Actions Against the Insurance Company

Part Two - Employers Liability Insurance

The insured is responsible for paying benefits in excess of those provided by the Workers' Compensation law, including those required because of the: insured's serious or willful misconduct, insured knowingly employing an employee in violation of law, insured failing to comply with health or safety laws, insured firing, coercing, or otherwise discriminating against any employee.

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

An injury after which an employee is able to do some work, but 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.

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 & the same minimum & maximum limits as Temporary Total. In most states, benefits are paid for life.

Permanent Total

The insured will pay the entire premium when due.

Premium Payments

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

Records

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

Recovery From Others (Subrogation)

Physical therapy & 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 insurance company; however, some states have established special state funds to pay for rehabilitation costs that are funded by taxes levied against insurance company's & self-insureds.

Rehabilitation Benefits

The premium for each work classification is determined by multiplying a rate & a premium basis. The premium basis is employee _______.

Remuneration

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.

Scheduled Benefits

The _______ pays compensation on behalf of an employer to an employee who has already suffered a prior disabling injury, & now sustains a subsequent injury, & the combination of the two injuries creates a greater disability than the second injury would have created by itself. The employer is responsible only for compensation that would have been paid the second injury occurred without the existence of the prior injury, & the fund pays the difference. This fund is designed to encourage employers to hire people with disabilities by limiting their liability for subsequent injuries. The _____ is usually funded by assessments against insurance company's & self-insurance company's but may also be financed through general state revenues.

Second Injury Fund

Voluntary Compensation Endorsement

Selected Endorsement

All states, except North Dakota & 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 & benefits are capped by statute. Employers must be obtain a Self-Insurance Certificate & may also purchase excess insurance or reinsurance. Some state also require the employer to purchase a surety bond.

Self-Insurance Plans & Employer Groups

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

The Insurance Company Will Also Defend

Owners, Partners & Corporate Officers.

Sole

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

Sole Representative

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.

State

The following apply as required by law: Notice of an injury must be given promptly, bankruptcy of the insured does not relieve the insurance company of its duties under the policy, the insurance company is liable to any person entitled to benefits under the policy, Under the Workers' Compensation law of the applicable state(s), jurisdiction over the insurance company is jurisdiction over the insured, the policy will conform to Workers' Compensation laws that apply to benefits & assessments payable under the policy, such as taxes, special funds, etc, Terms of this policy that conflict with state law are automatically changes to conform.

Statutory Provisions

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.

Temporary Partial

Which disability income benefit covers an injury that allows an employee to do some work, but is unable to earn his/her usual wage until full recovery?

Temporary Partial

An injury, from which an employee is expected to recover & 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 & maximum limits. In most states, it is 66 2/3%.

Temporary Total

The following amount, in addition to other amounts payable: expenses incurred by the insured, at the request of the insurance company, but not loss of earnings, premium for appeal bonds, litigation costs taxed against the insured, interest on a judgment against the insured, expenses incurred by the insurance company.

The Insurance Company Will Also Pay

The following amounts in addition to other amounts payable. Expenses incurred by the insured, at the request of the insurance company, but not loss of earnings. Premiums for appeal bonds. Litigation costs taxed against the insured. Expenses incurred by the insurance company.

The Insurance Company Will Also Pay

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

The Insurance Company Will Defend

The insurance company will pay the sum, up to policy limits, & the insured must legally pay for damages because of bodily injury to employees. The bodily injury must be covered by Part Two - Employers Liability Insurance, & the damages paid by the insurance company include: those for which the insured is liable to a third party because of a claim, care & loss of service, consequential bodily injury to an injured worker's spouse, or immediate family member. Actions brought against the insured in a capacity other than an as employee.

The Insurance Company Will Pay

The insurance company will promptly pay the benefits due.

The Insurance Company Will Pay

Establishes that the policy is a contract between the employer & the insurance company. The terms of the policy may not be changes or waived, except by endorsement.

The Policy

Employers Liability applies under _______.

The employee is allowed to sue the employer for neglignce

Recovery From Others (Subrogation)

The insurance company reserves the right to recovery its payments from anyone liable for injury.

Actions Against the Insurance Company

There will be no right to actions against the insurance company unless: the insured has complied with all terms of the policy. The amount owed by the insured has determined with the insurance company's consent or by trial or final judgment.

The insured is not allowed to transfer any rights & duties under the policy without the insurance company's written consent.

Transfer of the Insured's Rights & Duties

Prior to Workers' Compensation laws going into effect, an employee has to sue the employer & prove negligence to receive such benefits. The employer has three common law defenses to avoid paying claims: Assumption of Risk Fellow Servant Rule Contributory Negligence Once Workers' Compensation laws became effective, all work related injuries & occupational diseases became the responsibility of the Employer. This insurance became the sole source of remedy & the employee no longer had the right to sue the employer for damages. Compulsory vs. Elective Monopolistic vs. Competitive States

Types of Laws

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. The following information must be provided in the endorsement: the class of employees to be covered & the state of employment. The employees must waive their right to sue & accept coverage under the endorsement.

Voluntary Compensation Endorsement

______ is used by an employer who wants to provide Workers' Compensation benefits even when it is not required.

Voluntary Compensation Endorsement

Establishes that the employer is the insured.

Who is Insured

______ in certain circumstances where employers hire few employees, or employee job duties include agricultural, farm & ranch work, domestic duties, casual work, work as independent contractors, sole proprietors, or officers of corporations.

Workers are exempt from Workers' Compensation statutes

The Workers' Compensation policy, like other policies, contains various parts that address coverages & conditions. The standard NCCI policy is only 6 pages because the details regarding payment of benefits are contained in each state's Workers' Compensation act & statutes. 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

Workers' Compensation & Employer's Liability Insurance Policy

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

Workers' Compensation & Employers Liability Insurance Policy

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

Workers' Compensation Law

An _____ exists if the employer retains the right to direct the way work is completed, supplied the necessary equipment & tools, determines the work hours & the end results, & controls the method of compensation.

employer-employee relationship

_____ is NOT an exempt worker under Workers' Compensation statute.

employee in a company of 100 employees

_____ is NOT a covered injury occurring during the course of employment.

injury occurs while the employee is playing in a company softball game