Can I change my workers compensation insurance company during the policy period?

 Sure, you can cancel your policy. It’s your policy and you have the right to do so. You can  decide to pay the bills and keep going or you can choose to stop paying the bills and let the insurance company cancel your policy for non-payment (never a good idea) or you can request that your policy be cancelled, it is still a free country after all!  …..But be prepared…you may not like the consequences! 

An insurance policy is a contract, remember? You sign an application, pay a premium and the insurance company issues a policy, a contract, that lays out who will do what and how the policy will respond. One more time…IT’S A CONTRACT! So don’t be surprised as to the consequences built into the contract for any given action…on either party.

Did I say don’t be surprised? That’s kind a funny if you think about it….when’s the last time YOU read an insurance policy…that’s ok, not may folks do! And that’s where the trouble begins. You can believe the insurance company knows the contract forward, backwards, inside and out. They certainly know their rights as agreed to by you when you signed up for the policy. They know what they can and cannot do. That’s the sad part, most consumers, when they purchase a workers compensation policy, have no idea of the responsibilities they just agreed to.

So here’s a few things to know if you decide to change your workers compensation insurance company during the policy period:

  • You will be penalized and pay more premium for doing so; It’s called short rate cancellation. You may think if you cancel a policy they will only charge you for the time you had insurance…not correct. The insurance company will apply what’s known as a short rate cancellation table, developed to recognize the fact that claims may have occurred during the coverage period but have not been reported. This is a factor that will be applied to the cancellation premium. Simply it means the insurance company will get to charge you more if you cancel your policy closer to the renewal date than closer to the expiration date.
  • A cancellation audit will be conducted; Just because you cancel the policy doesn’t mean the insurance company will waive it’s right to audit and inspect your books to determine the proper exposure. And after the audit, they will perform the cancellation premium adjustments.
  • Anniversary rating date and experience modification changes; Not to worry about the Anniversary Rating Date endorsement! That had been eliminated by NCCI effective May 1, 2017! However, changing the anniversary date of a workers compensation policy will be confusing when it comes to how and when the experience modification factor calculations are conducted. Just because you change the policy date doesn’t mean the emod dates are automatically moved. It takes a few years for the emod calculation dates to catch up. This simply means your policy will be adjusted sometime during your policy period for any changes to your current emod. It will be confusing. And just by changing the date of your policy doesn’t mean that you will be receiving the current, and possibly lower rates, from your new insurance company. The application of the anniversary rating date endorsement to a policy sees to that.

While there may be good reasons that you want or need to move your workers compensation insurance policy to another insurance company, keep in mind there are issues you will have to deal with. It’s probaly a good idea for any employer considering cancellation or moving coverage to consult with an independent workers compensation consulting firm. Yep…a commercial for what we do! Sorry. But still a good idea! And keep in mind the items I’ve listed above are just few of the issues that can come up…believe me, there are more!

So let’s recap…yes, it’s your workers compensation policy, you can cancel it if you want…but there are consequences!

Don’t be surprised! Do your homework and learn the proper steps in cancelling or moving to another insurance company. It could save you thousands in hard earned money!

Hope this information helps you out! Thanks!