Workers Comp. Chapter 1 Section A

The following are several advantages to purchasing a private insurance workers compensation policy:

Employers Liability coverage is included, with certain limits for damages. Other States Insurance coverage is included if the other states are listed on the information page of the policy. The insurer bears all costs of investigation and payment of claims.

Sections of the Standard Workers Compensation Policy Form

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

Self-Insurance - An employer can also self-insure its workers compensation exposure. If the employer elects to self-insure, it is:

Legally obligated to pay for all workers compensation benefits required by law. Required to demonstrate to their state government that they have the ability to pay claims, either by posting a surety bond, or by depositing funds with the state treasury

What additional expenses will be paid -

Reasonable expenses incurred at the request of the insurance company, but not loss of earnings. Premiums for bonds to release attachments and for appeal bonds in bond amounts up to the amount payable under this insurance. Litigation costs taxed against the employer. Interest on a judgment as required by law until we offer the amount due under this insurance. Expenses incurred by the insurance company

Part Two - Employers Liability Insurance - How the insurance applies -

The bodily injury must arise out of, and in the course of, the injured employee's employment by the covered employer. The employment must be necessary or incidental to your work in a state or territory listed on the information page of the policy. Bodily injury by accident must occur during the policy period. Bodily injury by disease must be caused or aggravated by the conditions of employment. If the employer is sued, the original suit and any related legal actions for damages for bodily injury by accident or disease, must be brought in the United States of America, its territories or possessions, or Canada

Disability Income Benefits

"indemnity benefits" worker's injury will need to be scheduled as to severity and length of time to recover. There are four classifications of disability: Permanent Total Disability Permanent Partial Disability Temporary Total Disability Temporary Partial Disability

Rehabilitation Benefits

- In the case of disability, each state provides the necessary physical, mental, and vocational rehabilitation, including institutional care, maintenance costs, travel and incidental expenses.

Part Two - Employers Liability Insurance -

- Part Two of the policy describes: How the insurance applies -

common-law duties of employers

1. Provide a safe place to work; 2. Provide an adequate number of competent workers; 3. Provide safe tools and equipment; 4. Warn of inherent dangers; and 5. Make and enforce rules for the safety of all workers.

How Manual, Estimated, and Final Premiums Are Calculated The following factors will result in a secondary calculation known as the estimated annual premium.

A premium discount, based on the amount of the manual premium. A schedule rating factor, which is a percentage discount based on the insurers view of the safety, quality, and desirability of the insured, relative to the perceived average.

The Jones Act -

Also known as the Merchant Marine Act of 1920, allows maritime workers to sue their employers for negligence that results in injury or death. The Act uses the comparative negligence standard and allows the personal representative of a deceased crew member to claim damages on behalf of the survivors

The Federal Employers Liability Act (FELA) -

Applies to railroads and their employees. FELA is not considered a workers compensation act because employees are required to prove negligence on behalf of their employer, in order to collect on a claim. If the negligence cannot be proved, the employer is not liable for the claim. Damages are awarded using the comparative negligence standard

Common-Law Defenses of Employers

Assumption of Risk Comparative or Contributory Negligence Negligence of a Fellow Worker

How Manual, Estimated, and Final Premiums Are Calculated Experience modification factor-

Calculated by the NCCI annually for larger risks based upon the insureds last losses

General Section

Clarifies the terminology that is contained within the policy. The terminology clarified in the general section is as follows: The policy - used to reference the information page and all endorsements and schedules listed. Who is insured - refers to the employer named in item 1 of the information page. Workers Compensation Law - refers to the WC law and occupational disease law of each state named in the information page. State- any state in the US Locations - refers to the workplaces listed on the information page.

The Longshore and Harbor Workers' Compensation Act (LHWCA) -

Covers maritime workers who are disabled from injuries sustained on the navigable waters of the United States, or in adjoining areas used in loading, unloading, repairing, or building a vessel.

Information Page -

Essentially a declarations page that lists... named insureds Mailing address of the first named insured. policy period dates employers liability limits. list of endorsements attached to the policy. premium information

Premium Determination in the Standard Workers Compensation Policy Form Estimated versus Final Premium

Estimated Premium - premium that appears on the insureds information page, and is based of the underwriting information provided by the insured, regarding the types of work performed and the estimated annual payrolls. Final Premium - Insurer uses the information gathered from auditing the insureds actual work classifications and payroll within three years of the policy expiration date to compute the final premium. Final premium may result in an additional premium charge or a return of premium.

Part Two - Employers Liability Insurance - Damages the insurer will pay

For which the employer is liable for damages won from a third party by an injured worker. This type of third-party-over action occurs because the "exclusive remedy" of workers compensation insurance prevents an employee from suing the employer. The injured worker may sue a third party, and then the third party may sue the employer to recoup damages paid to the injured worker. For care and loss of services. Consequential injury to workers family at home.

Part One of the policy describes -

How benefits will be paid. insurance company will pay promptly when due the benefits required by the employer (the insured) by the workers compensation law.

Part Four - Your Duties if Injury Occurs -

Insured must report injury to the insurer immediately after the employer has been notified. employer must provide immediate medical care for the injured worker as required by WC law. Provide insurer with the names and address of the injured employee and any witnesses, and any other information that may be useful to investigate the claim. Provide insurer with all notices, demands, and papers related to the injury / claim / suit/ proceedings.

Experience Modification Factor

Insureds that have premiums above a certain amount are eligible for "experience rating" Individual state laws set the minimum policy premium amounts that will make an insured eligible for experience rating. NCCI uses a complicated mathematical formula that compares the insureds actual losses to expected loss for other companies of a similar size and work and result is refereed to as the EMF or E-mod. Purpose of experience rating is to reward insureds with a good loss experience with lower premiums and to penalize those with a bad loss experience. This creates a financial incentive for the insureds to prioritize safety and have control of workplace hazards.

Part Two - Employers Liability Insurance Exclusions -

Liability assumed under a contract. Punitive damages to an employee who was illegally employed. Any obligation imposed by a workers compensation. Bodily injury intentionally caused and or occurring outside of the US, its territories and possessions and Canada. Damages arising out of coercion, criticism, demotion, evaluation, reassignment, discipline, defamation, harassment, humiliation, discrimination against, or termination of any employee. Injury to to worker already covered under any federal WC program Additionally, the employer does not have the right to bring an action against the insurer, unless they have first complied with all terms of the policy, and the amount the employer owes in damages has been determined with the consent of the insurer, or by trial and final judgment.

Worker Classifications

NCCI separates all work performed into more than 500 different classifications and assigns a four digit code to each. NCCI files historical premium and loss information for each work classification organized by state. This information is used to develop different rates for each classification ans state. Some employers will have their premium rate based on only one classification , but others will have several classifications of employees that will be used to calculate their premiums.

The Black Lung Benefits Act -

Provides compensation to coal miners who are totally disabled by pneumoconiosis, more commonly known as Black Lung Disease, arising out of coal mine employment, and to the survivors of coal miners whose deaths are attributable to the disease. The Act also provides eligible miners with medical coverage for the treatment of lung diseases related to pneumoconiosis.

The Federal Employees' Compensation Act (FECA) -

Provides no-fault workers' compensation coverage to three million Federal and Postal workers, including wage replacement, medical and vocational rehabilitation benefits for work-related injury and occupational disease. The federal government self-insures this exposure.

Part Three - Other States Insurance

Provision applies if one or more states is listed in the other state insurance field on the information page. If employer begins work in any of the states listed on the information page after the effective date on the policy, and he is not already insured, all provisions of the policy will apply Employer must notify the insurer at once if it begins work in one of the states listed in the "other states" filed of the policy. Insurer cannot provide coverage in another state , if that state is monopolistic

Rates

Rates are expressed in dollar terms Rates are multiplied by the estimated annual payroll for the classification, and rate is applied per $100 of payroll. Class code: 8810 Rate: $.20 cents per $100 of payroll Estimated annual payroll: $80,000 Premium for this classification of work: ($.20 x 800) = $160.00

Part Two - Employers Liability Insurance - Additional expenses that will be paid -

Reasonable expenses, but not loss of earnings. Premiums for bonds Litigation costs interest on a judgment. Limits of liability are shown on the information page of the policy Will not pay more than the liability limit.

Part Six - Conditions -

Sets forth the conditions that apply in the policy. Including subrogation rights and cancellation. And insurers right to inspect the insureds workplace at any time.

Experience Modification Factor Numbers

The EMF is a number above or below 1.0. An EMF above 1.0 means the the insured's actual claims during the experience period were higher than expected. An EMF number below 1.0 means the insured's actual claims during the experience period were lower than expected. In the calculation of the estimated annual premium, the EMF is multiplied by the manual premiums. The impact of this calculation can be drastic, an EMF of 2.0 would double the insureds premiums. An EMF of .50 would cut the premium in half.

. Temporary Total Disability

The employee can, for a period of time perform no work at all, but is expected to recover and resume the same duties.

Temporary Partial Disability

The employee cannot immediately return to the same work, but can perform other "light duty" work while recovering.

Permanent Partial Disability

The employee has suffered a permanent impairment, such as the loss of a limb, leaving the injured worker unable to continue in the same line of work, but they could possibly be retrained to work in another field.

What payments must be made by the employer (insured) in excess of the workers compensation benefits -

The employer is responsible for any payments in excess of the benefits provided by the WC law because of willful misconduct such as: Knowingly employing a worker in violation of law; Failing to comply with a health or safety law or regulation; Discharging, coercing, or otherwise discriminating against any employee in violation of the workers compensation law.

How the insurance company will defend the employer (the insured) against claims -

The insurance company has the right and duty to defend, at the expense of the insurance company, Also has the right to investigate and settle these claims, or continue with proceedings or suit.

How "other insurance" will be handled -

The insurance company will not pay more than their share of benefits and costs, covered by this insurance, and other insurance or self-insurance All shares will be equal until the loss is paid. If any insurance or self-insurance is exhausted, the shares of all remaining insurance will be equal until the loss is paid.

Death and Burial Benefits

The most common death benefit that is paid to the surviving spouse and children is 66-2/3% of the deceased worker's wages, subject to weekly maximum and minimum limits. A flat amount is usually provided as a maximum burial allowance. All of these amounts are determined by state law,

How Manual, Estimated, and Final Premiums Are Calculated

The total of these premium computations is known as the standard, or manual premium. After manual premium is calculated, its subjected to other factors, including state WC laws and practices, by the insurer writing the coverage.

Permanent Total Disability

The worker is permanently, and totally, disabled and will no longer be able to work from the date of the injury going forward.

Negligence of a Fellow Worker

This would apply only if a worker was negligent and caused the injury of a fellow employee of the same rank. This defense is narrowly interpreted and not commonly accepted by the courts.

How Employers Meet Workers Compensation Obligations Private Insurance

Workers compensation coverage can be purchased from private insurance carriers, and this is the most common method used by employers. Private insurance cannot be purchased in monopolistic states, those states that require employers to purchase coverage from the state administered workers compensation plan.

Part One: Workers Compensation Insurance

applies to bodily injury by accident, or bodily injury by disaease. The employee's last day of exposure must occur during the policy period

fundamental tradeoff.

employees who are injured at work, lose their right to sue their employers for negligence, but in exchange, they will receive benefits to compensate them for their injuries

A disadvantage to private workers compensation coverage is that it

includes a deductible, and sometimes these deductibles can be very large.

Assumption of Risk -

injured worker was aware of the dangers, but voluntarily exposed him or herself to the dangers anyway.

Comparative or Contributory Negligence -

negligence of the employer is compared to the negligence of the injured employee and the award is based upon the percentage that each party was negligent.

Medical Benefits

provide for the prompt payment of legally prescribed benefits without regard to fault. Therefore, there is no need or right, for an employee to bring a lawsuit against the employer, or to prove negligence, or for an employer to assert a defense. benefits include medical loss of income, rehabilitation, and death and burial expense benefits.

Part Five - Premium

section addresses how WC premium is determined. Includes provisions about insurers manuals of rates and classifications, payroll estimations and how premiums are determined by an audit Insurer has the right to examine an insureds relevant records for three years after the policy expires

Waiting Period

two to seven days, Percentage of workers weekly wage.