Workers Compensation Insurance Mistakes – Poor Assumptions and the Premium Problems They Cause

It’s not MY job! …Ever hear someone say that? Whatever happened to taking responsibility? Is it really that hard to look up the rules or check a state statute? Unfortunately for some folks, it is… So in this post let’s take a look at some of the workers compensation premium problems making incorrect assumptions can cause.

Poor or incorrect assumptions made by underwriters, employers, policyholders, agents, adjusters, processing staff and auditors can lead to increased and/or incorrect workers compensation premiums. While the workers comp product seems simple on the surface it’s really like an iceberg. You only see ten percent (10%) of what’s really there. But it’s what you don’t see that can sink your ship!

Employers often make costly mistakes by making an assumption about their workers compensation policy. A common mistake is assuming an uninsured subcontractor will not effect their premium when in fact it’s typical that compensation to uninsured subs are picked up at audit and included in the remuneration on the employers policy. Most of the time unexpectedly raising the premium the employer has to pay. They make assumptions that coverage from their policy will apply when they expand into other states when in fact it may not.

Agents make assumptions that they really know what their clients are doing only to be surprised at audit when the auditor discovers the employer belongs in a higher rated classification. Or they may set the original policy up with payroll separation when in fact payroll separation is not allowed for their clients specific work operations.

Auditors may assume that an employer is incorrectly classified, add codes and move payroll at audit when they are not allowed to make such a change. Or they may assume that owners are  included when they are excluded.

Adjusters make assumptions and mistakes in reserving and servicing claims. Incorrect reserving practices or claim handling practices can lead to high experience rating factors which in turn increase the premium an employer pays for a period of years.

Underwriters and processing staff make assumptions and mistakes in application of credits and rules. Assumptions in policy processing can lead to incorrect application of policy endorsements.

Incorrect assumptions lead to mistakes and when it comes to workers comp those mistakes usually translate into higher premiums! So be sure to ask questions if you have a concern about your policy. If you’re not satisfied with the answers or want an independent confirmation just contact an independent Workers Compensation Consultant!

Hope this helps you out! Thanks!