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Certificates of Insurance Effect Cost Of Workers Comp
Learn how lack of an insurance certificate can increase your work comp premium....
- The Certificate Process
As mentioned in earlier sections about insurance certificates this informational piece of paper is issued to someone who as an independent third party has an interest in the policy coverage as shown on the policies issued by an insurance company to the named insured. Their interest may be that as a party to a separate contract with the named insured. Whatever their interest the process of issuing an insurance certificate is the same.
How a Certificate of Insurance Can Effect Workers Compensation Cost:
When it comes to workers compensation insurance it's all about "whose workers they are anyway." Keep in mind the goal of a state workers comp system is to provide coverage to all workers. So many times it boils down to the phrase "just whose workers are they?" You may be surprised! Here's a short list of items you need to be aware of:
- The primary function of workers compensation is to make sure every worker is covered by workers comp so who pays the premium? How is this accomplished;
- Workers compensation rules and laws are very broadly written to make sure you are responsible for all workers you hire;
- If your workers compensation insurance company MAY have an exposure to paying a claim, wether that exposure turns into a claim or not, then they have a right to charge for that exposure on your workers comp policy. So when you hire another company to perform any work on your behalf you have exposed your workers comp carrier to a possible workers comp claim situation;
- The workers comp auditor is who determines additional exposure for the insurance company at the time of audit.
- If your workers compensation insurance company MAY have an exposure to paying a claim, wether that exposure turns into a claim or not, then they have a right to charge for that exposure on your workers comp policy. So when you hire another company to perform any work on your behalf you have exposed your workers comp carrier to a possible workers comp claim situation;
- How do you protect yourself from incurring additional workers compensation cost?
- If you are the hiring company:
- You must secure a properly completed certificate of insurance from the company you hire prior to any work beginning;
- With a properly completed insurance certificate in your files, when audit time comes, you will be able to show the auditor workers compensation coverage was in place during the time you paid the other company and the workers compensation premium was paid by the other company.
- With a properly completed certificate you will not be charged on your workers compensation policy for the work performed by the other company.
- With a properly completed insurance certificate in your files, when audit time comes, you will be able to show the auditor workers compensation coverage was in place during the time you paid the other company and the workers compensation premium was paid by the other company.
- If you are the hired company:
- You will be asked to provide a certificate of insurance.
- The certificate needs to show coverage in place no later than the date you begin the work and ending no earlier than the date you complete your work.
- You must secure a properly completed certificate of insurance from the company you hire prior to any work beginning;
How about a recap:
- Without a workers compensation certificate of insurance:
- You will pay workers comp premium on the other companies workers at the job class and rate which applies for the work they do;
- With a workers compensation certificate of insurance:
- No additional premium will be charged to you for their work, you pay yours, they pay theirs!
- Workers compensation rules and laws are very broadly written to make sure you are responsible for all workers you hire;
- The primary function of workers compensation is to make sure every worker is covered by workers comp so who pays the premium? How is this accomplished;
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