Workers Comp Policy Questions – Readers Top 10 Questions

Worker’s Comp Policy Questions Received From Readers and Google Searchers 

The number of Worker’s Comp policy questions we receive by email, contact form, and phone increase exponentially July through September of each year. I decided to answer some of the questions received over the last three years.   

US Congressional Library – WD Goldbeck painter

Is reading my Worker’s Comp policy worth the time? 

Yes.  If you look at the policy as a contract between you and the insurance company, the perspective might change a little. The review will be worth your time. When companies continually review their worker’s comp information, we usually note a drop in their premiums, or what their premiums would have been without the policy review process. 

When should we start the policy review process? 

Pull up your policy now on your computer, phone, tablet, or print it out for the old-school review.  Read it using the very powerful policy review tool. Check here for that tool.  Great, now read the policy back to front. Yes, read it backward. Why? Because many readers with worker’s comp policy questions stop in the middle.  

Can I just let my agent review the policy for me? 

Do not leave the policy review solely to your agent. Most of the agencies/agency we assist love the fact that their client insureds involve themselves with the policy process. I have never heard an agent not want a client to become more involved in a policy procurement process. 99% of the agents want your feedback.  As mentioned in the previous heading, insureds usually see a premium reduction just by becoming more involved in the policy process. 

Is the Declarations Page really all I need to review?

The Dec Page represents the “meat” of the policy. Let us call it the main part of the policy. Only reading the Dec Page compares to test-driving a car without lifting  the hood.  Your company needs to review the policy beyond just the Dec Page. If you only have a limited amount of time, then review the Dec Page first.   

We receive Policy Change Notifications infrequently – Are those considered part of the policy review? 

Most definitely. The last section of the policy is referred to as Endorsements. Endorsements to the policy change the original policy. Endorsements may also change the prior endorsements. We recommend an old-school review of any endorsements. Endorsements remain just as important as the Dec Page. Print them out. Review them very closely.  Most endorsements cover minor changes. Some can be major. 

For example, if your company’s operations move into a new state, the policy may be endorsed to include coverage for that state.

A policy can be endorsed an unlimited number of times.   

You mentioned policy parts – what are those?  

Think of the acronym DICEE. I learned the parts of ANY policy many years ago using this acronym. Your auto, home, etc. policies all have these same parts.   

• Declarations including definitions
• Inclusions also called Insuring Agreements
• Conditions,
• Exclusions and
• Endorsements.   

Check here for some great reading on the parts of a policy. Some policies also contain policy forms, riders, and jackets.   

What if I do not have the time to read a long boring policy? 

Can you delegate it to a co-worker or assistant? One of the best ways to have someone to review your policies – not just for Worker’s Comp policy questions – is by hiring a college intern.  Do not ask them to work for free.   Give them a little training before they start.  Let them use this blog as a reference tool.  

We have incorporated many ideas that originated with a college intern asking questions and adding value such as incredible spreadsheets for analysis and other great contributions.  

The “outside looking in” vantage point of a college intern makes a company rethink some of its operations.  

We want to switch carriers in the middle of our policy term –  Can we switch? 

Yes, but almost all carriers charge what is called a short rate penalty for changing to another carrier mid-policy. The penalty can be very substantial until near the end of your policy period. The short rate penalty + the new policy premium totals to a large chunk of the budget. You may also alienate your agent from your business operations.   

We do not want to discourage your company from making business decisions such as moving a policy other than the financial considerations. 

How do premium audits fit into a policy review? 

An employer should think of a premium audit as the final closing process of the policy. Premium audit results and bills should be thought of as the most important Endorsement to your policy. Premium audits should be reviewed line-by-line with the premium auditor’s workpapers as a guide. We provided a large number of articles on premium audits for your review.  

We just received our Rating Bureau Worksheets – What do we do with those? 

The rating bureau worksheets should be viewed as another policy endorsement of sorts. Your experience modification factor represents your risk factor. The E-Mod or X-Mod can cause your company to pay a large amount of additional premium. Reviewing the worksheets can be a confusing task.   

Bonus  Worker’s Comp Policy Question – What Is The First Step To A Policy Review? 

Just getting involved with the worker’s comp policy process can be a good first step.  Health insurance seemed to be the most important budget item.  Now, employers have become more inquisitive on this large piece of their budget.  We now receive many more worker’s comp policy questions than even 18 months ago.   

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at www.cutcompcosts.com.

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