workers compensation insurance (casualty)
PREMIUM DISCOUNTS
a premium discount applies when an insured owes a total standard premium greater than $5,000
MONOPOLISTIC VS. COMPETITIVE
in some states, employers are required to purchase workers compensation insurance from a state-operated entity. these are called monopolistic state funds. private insurance companies cannot write workers compensation insurance in competition with these state funds. in other states, workers compensation is purchased by employers from those insurers authorized to write casualty insurance. the coverage and benefits are mandated by state regulations. this is known as the competitive market.
FOREIGN COVERAGE
the foreign coverage endorsement extends coverage to suits brought in foreign jurisdiction. this endorsement often provides for the insured's expenses to return to the US.
VOLUNTARY COMPENSATION ENDORSEMENT
the voluntary compensation endorsement added to a workers compensation policy provides statutory coverage for employees who do not fall under a state's workers compensation act, such as farmworkers. this endorsement provides that the insurer will pay statutory benefits to the insured person in exchange for the injured worker releasing the employer and the insurer from further liability. if the employee does not sign the release, any further compensation under the endorsement ceases.
JOB CLASSIFICATION - PAYROLL AND RATES
workers compensation rating is developed by applying a rating bureau job classification rate to each $100 of payroll. estimated payroll figures and job classifications are used when a policy is issued, and the final premium is determined by an audit. payroll means remuneration. in includes salaries, wages, commissions, bonuses, non-cash compensation, vacation pay, and sick leave pay. insurers may audit the records of an employer up to 3 years after the expiration of the policy.
PART SIX - CONDITIONS
the conditions found in the workers compensation and employers liability policy include the following: *inspection - the insurer has the right to inspect the workplace at any time *long-term policy - if the policy period is longer than 1 year and 16 days, all policy provisions will apply as though a new policy was issued on each annual anniversary date. *transfer of your rights and duties (assignment) - the insured's rights and duties may not be transferred to anyone else without the insurer's written consent. *cancellation - the insurer must provide the insured with at least 10 days advanced written notice for any type of cancellation *sole representative - the first named insured will act on behalf of all insured under the policy.
FEDERAL EMPLOYERS LIABILITY ACT (FELA)
the federal employers liability act (FELA) is an employers liability law rather than a workers compensation law. it predated workers compensation and makes an interstate railroad liable for bodily injury sustained by employees. coverage for liability under FELA is covered under Section II of the workers compensation and employers liability policy unless specifically excluded. although most state workers compensation laws restrict recovery to economic losses only, the FELA typically allows railroad employees to recover the following types of damages: *lost earnings, past and future *medical expenses if paid out of pocket by the injured employee *payment for the employee's reduced ability to earn a wage because of the injuries suffered *compensation for pain and suffering all actions regarding FELA must commence within 3 years from the day the cause of action began.
DEATH AND SURVIVOR
workers compensation will pay up to $7,500 in addition to other benefits, for the reasonable expense for burial of an employee whose death results form a covered injury or occupational disease. for injury causing death within 2 years after the last treatment resulting from a covered accident, a weekly sum will be paid to the legal dependents of the employee. dependents who were only partially dependent upon the employee for support will only receive a partial weekly amount of the weekly benefit. if the employee leaves no legal dependents entitled to benefits, the sum of $75,000 will be paid to each surviving parent of the deceased employee, in a lump sum, which shall constitute the sole and exclusive compensation.
OCCUPATIONAL DISEASE
every employee who is disabled because of an occupational disease is entitled to the same compensation as the employee would receive from an accident resulting from personal injury arising out of the course of employment. an occupational disease is the result of causes and conditions characteristic of and peculiar to the particular trade, occupation, process, or employment in which the employee is exposed to. occupational disease will include injuries due to work-related carpal tunnel syndrome. it does not apply to the following: *degenerative disc disease *spinal stenosis *arthritis of any type *mental illness *heart-related illness laboratory technicians who are disabled because of contracting a disease condition or poisoning that is a result of his or her work will be entitled to the same compensation as if the technician was the victim of an accidental personal injury at work. the employee must have worked for the employer for 12 months or more to have the occupational disease covered by that employer. notice of the time limitations placed upon claims for occupational disease must be conspicuously posted by every employer. if the employer fails to post this notice, the time in which a claim may be filed will be extended for an additional 6 months.
SELF-INSURED EMPLOYERS AND EMPLOYER GROUPS
every self-insurer who provides its own workers compensation insurance must apply for a certificate of authority. after receiving a completed application, the commissioner will conduct an examination to determine if the applicant is property organized and has complied with all requirements to be issued a certificate. any 5 or more employers who are not public entities, have a positive net worth, and are members of the same trade or professional association may agree to pool their liabilities to their employees' personal injury and occupational disease.
PARTICIPATION PLANS
in some states, insurance companies are allowed to write participating policies. this means the insured is eligible for dividends (partial premium refund) if the experience during the policy term falls within guidelines established by the insurer at the inception of the policy term. dividends are not guaranteed. to be eligible for participation, the account must generate a minimum amount of premium. in the case of a group policy, the group must qualify for the dividend. in the event the group's loss experience is low, participating members may receive a dividend. (no penalty is levied for a high loss experience.)
US LONGSHORE AND HARBOR WORKERS COMPENSATION ACT
persons (other than seamen) who are engaged in maritime employment are covered under a federal workers compensation statute, the US long shore and harbor workers compensation act (LHWCA). a worker is covered under the LHWCA only if he or she meets a situs and status test. the injury must occur on the navigable waters or on an adjoining wharf, pier, dock, or similar facility used in the loading, unloading, building, or repairing vessels. in addition, the individual must have been engaged in maritime employment when injured. when coverage is required for LHWCA, it may be added to a workers compensation policy by endorsement. the longshore and harbor workers compensation act, and its extensions, provide medical benefits, compensation for lost wages, and rehabilitation services to employees who are injured during the course of employment, or contract an occupational disease related to employment. survivor benefits also are provided if the work-related injury causes the employee's death.
MEDICAL
the employer must furnish all necessary drugs, supplies, hospital care and services, medical and surgical treatment, and any nonmedical treatment, and utilize all public or private facilities in order to provide the injured employee with all necessary services. the employer must furnish to the employee the cost of repairing or replacing any prosthetic device accidentally damaged or destroyed in the course of employment, including damage or destruction of eyeglasses, artificial limbs, hearing aids, or dentures. the employer is liable for the employee's expenses for mileage traveled in order to obtain medical services and vocational rehabilitation. (the employer must inform the employee of this right to reimbursement) upon the first payment for medical care, the payer must communicate to the claimant, in plain language, the procedure for requesting an independent medical examination in the event of a dispute. a payer cannot deny medical care to a claimant unless the payer can document its attempts to communicate this information. a payer who denies medical care, service, or treatment without making this effort may be fined up to $500 or the cost of the medical care, whichever is greater. no disability compensation will be paid for first week after the injury occurs. if the disability continues longer than 6 weeks, compensation for the first week will be paid.
THE JONES ACT (SHIPCREWS)
the jones act is a federal act that covers ships' crews with the same remedy available to railroad workers. generally, anyone who spends more than 30% of his or her time on a vessel that is in navigation will qualify as a jones act seaman. seaman may sue an employer for injuries sustained through the employer's fault or negligence. the act applies to navigable waters used to international or interstate commerce. an employee that does not qualify as a jones act seaman (i.e. one who works as a contract employee who moves back and forth between multiple vessels not under common ownership) will generally be covered under longshore or maritime law, and not under the jones act.
PART FIVE - PREMIUM
the premium section explains how premiums are determined and gives the insurer an option to audit the insured's books and records. premiums are determined based on each $100 of the annual payroll of each occupational classification. because of the insured cannot know the final payroll until the end of the policy period, the initial premium is considered a deposit and is subject to adjustment at the end of the term. this takes place during the premium audit. some insurers also will apply experience rating to the final premium. experience rating provides rate credits or debits due to the insured's actual loss experience during prior policy periods. if the losses are less than expected, a rating credit will be applied.
SECOND/SUBSEQUENT INJURY FUND
the second injury fund was established to encourage the employment of physically handicapped employees who have permanent, partial disability by protecting employers and insurers from excess liability when a subsequent injury to an employee merges with a pre-existing disability and causes greater disability than would have resulted from the subsequent injury alone. the payment of compensation to an injured employee will be determined for the subsequent injury alone, and the amount of any increase in disability from the prior injury is paid from the second injury. the second injury fund is maintained by assessment of every property and casualty insurer and individual and group self-insurers.
COMPULSORY VS. ELECTIVE
the workers compensation laws vary from state to state. most states have compulsory laws, which require all employers, except those specifically excluded due to staff size or employment type, to provide workers compensation coverage for those meeting the definition of employee. the remaining few states have elective laws, which means he employer does not have to be subject to the state's workers compensation laws, but if an employer chooses not to be subject to the state's laws, it loses its common law defenses against liability suits. only 2 states (new jersey and texas) still have elective laws.
REHABILITATION
when employees suffer injuries covered by workers compensation that prevent them from earning wages equal to what they earned before the injury, they will be entitled to prompt rehabilitation services. the first appropriate option among the following must be chosen for the worker: *return to the same position *return to a modified position *return to a related occupation suited to the claimant's education and skills *on-the-job training *short-term retraining program (fewer than 26 weeks) *long-term retraining program (26 weeks to 1 year) *self-employment the employer is responsible for selecting a vocational counselor to evaluate and assist the employee in his job placement or vocational training. if the employer refuses to provide these services, or a dispute arises concerning the work of the counselor, the employee may file a claim with the office to review the need for and quality of these services in the same manner as established for dispute resolution of claims for workers compensation benefits.
PART ONE - WORKERS COMPENSATION INSURANCE
workers compensation coverage, which applies to accidental BI, death, or occupational disease, provides coverage for the statutory benefits required under the state's workers compensation laws. the actual benefits provided are not included, only a reference to the individual state's law. the policy also states that the insured is responsible for any benefits over those required by law that may be required due to the insured's willful misconduct or violation of safety or employment laws. supplemental payments are also included and are similar to those found in other types of insurance policies. they include the following: *defense costs *expenses incurred at the insurer's request *premiums for certain bonds *litigation costs *interest on judgments required by law until the insurer offers a settlement *all expenses the insurer incurs the workers compensation section also contains the other insurance clause. it states that the insurer will pay equal shares in the event there is other insurance, including self-insurance, that can also respond to the loss.
LA WORKERS COMPENSATION ACT EXCLUSIVE REMEDY
workers compensation insurance is intended to be the exclusive remedy for work related injuries without any consideration of fault or negligence on the part of either the employee or the employer. in return for this right of compensation, the employee gives up the right to sue the employer for perhaps a larger but uncertain amount. however, an employee or his or her dependents may sue for damages from accidents, injuries, disease, and death if they are the result of intentional acts of employers. the immunity provided the employer under workers compensation laws do not extend to the following: *any officer, director, stockholder, partner, or employee of the employer or principal who is not engaged at the time of injury in the normal course and scope of his employment; and *to the liability of any partner in a partnership that has been formed for the purpose of evading any of the provisions of the law
EMPLOYMENT COVERED (REQUIRED, VOLUNTARY)
workers compensation law provisions apply to every person who is self-employed or works for an employer. the following may elect not to be covered: *the bona fide president, vice president, secretary, or treasurer of a corporation who owns at least 10% of the stock *a partner or a member of a limited liability company who owns are least a 10% interest of the partnership or company *a sole proprietor the following employees are exempt from workers compensation coverage: *any employee of a private residential household whose tasks are not related to the occupation of the householder *any employee of a private unincorporated farm when the employee earns less that $1,000 a year, the total net earnings of all farm employees do not exceed $2,500, and whose labor is not related to the trade, business or occupation of the farm *musicians and performers who work according to a contract *members of an airplane crew engaged in agricultural spraying or dusting regarded as independent contractors *volunteer officers and board members of nonprofit veteran, charitable, fraternal, civic, or social organizations *any real estate broker or salesperson licensed in LA and operating under the auspices of a licensed broker in LA a person performing a service for another in any trade, business, or occupation covered by workers compensation laws is presumed to be an employee of that person. every executive officer elected or appointed and empowered according to the bylaws of a corporation will be considered to be an employee of the corporation. this does not apply to executives of the following: *charitable, religious, educational, or other nonprofit corporations *state or municipal officers *any incorporated public board or commission
if an employer has any workers compensation expenses related to a worker with a pre-existing medical condition, the second injury fund will reimburse those expenses as follows:
INJURIES BETWEEN JULY 1, 2004 AND JULY 1, 2009: INDEMNITY: after the first 130 weeks of payment of benefits MEDICAL: 100% of all reasonable and necessary medical expenses that exceed $25,000 INJURIES BETWEEN JULY 1, 2009 AND JULY 1, 2010 INDEMNITY: after the first 104 weeks of payment of benefits; death benefits after the first 175 weeks of payment benefits MEDICAL: 50% of all reasonable and necessary medical expenses that exceed $5,000 (but less than $10,000); 100% of all medical expenses that exceed $10,000 INJURIES BETWEEN JULY 1, 2010 AND JULY 1, 2015 INDEMNITY: after the first 104 weeks of payment benefits MEDICAL: 100% of all reasonable and necessary medical expenses that exceed $25,000, including vocational rehabilitation all of these payments will only be reimbursed if they are submitted to the board within 1 year of the approval for reimbursement or within 1 year of such medical payments - whichever is later. in most cases, these amounts do not include legal fees.
WORKERS COMPENSATION AND EMPLOYERS LIABILITY INSURANCE POLICY GENERAL SECTION
all workers compensation employers liability policies, which may contain slight variations by different insurers, are based on the national council on compensation insurance's standard policy. the policy contains an information page, which is the similar to the declarations found in other types of insurance policies. it includes a description of each operation conducted at the insured location. in addition, this page shows which state workers compensation laws apply for part I - workers compensation, and the policy limits for part II - employers liability. the general section of the policy provides a few definitions that further clarify policy intent. this section states that the policy and all attached endorsements is a contract between the insured and insurer and that none of the policy provisions may be waived without the consent of the insurer. it also defines who is insured (the employer and any partners), workers compensation laws (excluding federal laws), state (US and District of Columbia), and locations (shown on the information page). approximately 90% of all employees are covered under workers compensation laws. however, each state defines certain classes of employees that are exempt from coverage. for these exempt employees, employers are not required to provide workers compensation benefits, but they can be voluntarily provided. BI and occupational disease that arise out of or during employment are covered under workers compensation insurance. occupational disease must be caused or aggravated by a condition of the employment. in other words, there must be a direct relationship between the job and the disease. ordinary diseases suffered by the general public are not covered. the following types of injuries are generally excluded from coverage: *injuries that occur traveling to and from work *injuries that result from intoxication of the employee *injuries willfully caused by the employee *injuries that result from a willful failure to follow safety precautions *injuries that occur from activities not a part of the job penalties and/or increased benefits may be required for certain types of injuries, such as the employer's willful failure to provide required safety equipment, or minors injured while illegally employed. these penalties must be paid by the employer because they are excluded under workers compensation insurance. in all states, medical payments are unlimited. there are no dollar limits or time limits set out to pay for necessary medical and surgical expenses, except possibly for certain types of care. benefits provide disability income payments for an injured employee's loss of wages. benefits begin after an initial waiting period, but benefits will be paid retroactive to the beginning of the disability if the disability lasts for more than the period of time defined in the policy. benefits are usually expressed as a certain percentage of the injured worker's wages, subject to certain weekly maximums and minimums for temporary total disability and permanent total disability. total disability refers to an individuals total inability to work. for temporary partial disabilities, which refers to a person's ability to do some work or the need to do alternative work, benefits are expressed as a percentage of lost wages equal to the difference between the wages earned before and after the injury. some states also provide a schedule of benefits for specific permanent partial disabilities, such as the loss of a limb, hearing, or eyesight. these benefits are usually in addition to any other benefits paid. death benefits usually pay a small amount for funeral and burial expenses, and weekly income benefits to the surviving spouse and/or children. the weekly benefit usually equals a certain percentage of the deceased worker's income. benefits may continue for the remaining life of the surviving spouse or until remarriage. rehabilitation expenses include vocational training and necessary medical expenses for physical and mental therapy. benefits also include board, lodging, and travel expenses. states may impose weekly or maximum benefits, or limit benefits for certain types of rehabilitation. all states have enacted what is called a second (or subsequent) injury fund. these funds are designed to pay for any additional benefits that may be required when an employee with a previous injury or disability (whether work related or not) suffers a second injury that causes the disability to be more serious than if there had been no prior disability. for example, an employee with only 1 arm loses use of the second arm, the resulting disability would be much worse, usually resulting in a permanent total disability. without the second injury fund, employers would be subject to the additional liability imposed by such injuries and would not have any incentive to hire disabled employees.
COVERED INJURIES
covered injuries include only injuries by violence to the physical structure of the body and disease or infection that naturally result from them. covered injuries will not include any other form of disease or derangement, however caused or contracted. specifically excluded from coverage, unless demonstrated by clear and convincing evidence to be work-related is mental injury caused by mental stress and heart-related or perivascular injuries.
WORKERS COMPENSATION LAWS
before the enactment of workers compensation laws, employees injured on the job had to prove that an employer's negligence resulted in the injury. even if negligent, the employer usually could invoke the following common law defenses: 1. fellow servant rule - if the injury was caused by the negligence of a fellow employee, it was no considered the negligence of the employer. 2. contributory negligence - if the injured employee was even partially responsible for the injury, the employee was barred from any right to collect for damages 3. assumption of risk - this asserted that the employee knew in advance the risks associated with the job and had been paid for these risks through his or her salary. eventually, states began to enact employer's liability laws, diluting some of the common law defenses. by the early 1900s, states started to enact workers compensation laws. these laws were primarily elective, allowing the employer or employee to pursue the case outside the workers compensation law or to use the fixed-benefit remedies provided under the law. compulsory laws, which mandated that the exclusive remedy for injuries was to be provided under the workers compensation law, were later enacted. this established a form of absolute liability that required compensation for injured workers regardless of fault or negligence. today, works compensation laws are in effect in every state. in 1970, the federal government enacted the occupational safety and health act (OSHA), which set minimum standards for work safety. under OSHA, individual states could retain jurisdiction over work safety, as long as their standards met the minimum standards establish by OSHA. in addition to the state workers compensation laws, the federal government imposed federal compensation laws for jobs that fall under federal jurisdiction. these programs include the following: 1. the federal employees compensation act covers civil employees 2. the US longshoremen's and harbor workers compensation act provides benefits to crews or vessels, including employees engaged in shipbuilding or repair. 3. the defense base act provides benefits to civilians who are employed on a military base 4. coal miners are provided coverage under the federal black lung compensation insurance program. 5. railroad employees are exempt from the compensation laws in many states. however, the federal employers liability act (FELA), which was passed in 1908, allows injured workers to sue their employer for negligence and removes the common law defenses of contributory negligence and assumption of risk. today, all employees that are subject to workers compensation laws are required to purchase workers compensation insurance or set up a formal program of self-insurance. workers compensation insurance is most commonly purchased through private insurers.
EXPERIENCE MODIFICATION FACTOR
experience modification factor is developed by a rating bureau. the calculations relate an employer's losses, payrolls, and premiums, segregated according to classifications of operations, all as reported to the bureau by the employer's insurance company.
PART TWO - EMPLOYERS LIABILITY INSURANCE
employers liability insurance coverage protects the insured from situations not covered under a state's workers compensations law. unlike the workers compensation coverage part, which does not specifically show the statutory limits provided, employers liability limits are shown on the information page. the basic limit provided is $100,000 for BI per accident, $100,000 per employee for disease, and a $500,000 policy limit for disease (for all disease claims within the policy term). most insurers allow the insured to purchase higher employers liability limits for an additional premium. besides the basic coverage, this section also provides supplemental coverage, which is similar to that found in other policies. there are several exclusions that apply to employers liability coverage: *liability assumed under a contract *punitive or exemplary damages *employees knowingly employed in violation of law *injury intentionally caused by the insured *injuries that occur outside the US, its possessions, or Canada (injuries to a resident temporarily outside these areas are covered) *damages caused by the employment practices or policies of the insured, including defamation, harassment, humiliation, discrimination, or termination or any employee *employees who are subject to federal workers compensation or employers liability laws (although coverage is usually available by endorsement) *fines or penalties imposed because of a violation of state or federal laws *damages payable under the migrant and seasonal agricultural worker protection act or similar laws the other insurance clause states that losses will be paid on a contribution by equal shares basis. the limit of liability provision explains that the limits on the information page for bodily injury by accident apply per accident, and bodily injury by disease applies per person subject to the bodily injury by disease policy limit for all losses during the policy term. the final 2 provisions refer to the insurer's subrogation rights and actions against the insurer.
PART THREE - OTHER STATES INSURANCE
other states' insurance coverage extends an insured's coverage for new operations in other states (excluding the monopolistic states) on an automatic and temporary basis. it includes coverage for incidental exposures in other states. this optional coverage must be listed on the information page. if the insured begins working in another state, the insured must notify the insurer at once.
PART FOUR - YOUR DUTIES IF INJURY OCCURS
part four - your duties if injury occurs explains the insured's duties in case of an employee injury. these duties are the following: *notify the insurer at once *provide immediate medical care required by the law *provide the names and addresses of the injured worker and any witnesses *promptly send any notices or other legal papers *cooperate with the insurer *do not make any voluntary payments or assume any obligations
BENEFITS PROVIDED
payment of compensation must be paid as closely as possible at the same time and place as wages were payable to the employee before the accident. the first installment of compensation payable for temporary total disability, permanent total disability, or death is due 14 days after the employer or insurer has knowledge of the injury or death.
PERMANENT PARTIAL
permanent partial disabilities refer to such disabilities as the loss of a limb, hearing, or eye sight.
TEMPORARY PARTIAL
temporary partial disability refers to a person's ability to do some work or the need to do alternative work
TEMPORARY TOTAL
temporary total disability refers to a person's total inability to work for a temporary amount of time
LOUISIANA WORKERS COMPENSATION CORPORATION
the LA workers compensation corporation was established to do the following: *provide a residual market for those employers that have tried, unsuccessfully and in good faith, to purchase coverage in the voluntary market *provide a competitive market for preferred risk policies *ensure that rates charged are adequate to provide solvency and self-funding of the corporation the LA workers compensation corporation operates as a domestic mutual insurer for the benefit of LA employers.
PERMANENT TOTAL
total permanent disability refers to an individual's total inability to work ever again
