Workers Compensation Insurance Basics
One of the most overlooked insurance forms is the Workers Comp policy. The reason for this is because the limits and coverages are, to an extent, required to meet a State's regulations. Oklahoma Workers Compensation laws can be found in full detail at here. More on that in another blog.
Don't look at your Work Comp as just another insurance expense. This is the policy that you, as an employer, have the most control over the pricing. It is vital to understand what is covered and how the policy is structured. Let's dive right in.
The workers comp policy lays out very plainly what is covered, excluded, and how the policy works in 6 parts. The first 3 parts are the foundation, and are the topic of this video.
Part 1 covers the Statutory Coverages - Medical, Death, Rehab and Disability benefits. There is no given limit for these coverages because, for Oklahoma domiciled employers, the State of Oklahoma determines the amounts that the insurance company will pay out. This is what most people think of as Workman's Comp or work comp insurance. Your employee gets injured on the job or become ill due to a workplace condition and must be treated at a hospital or undergo physical therapy treatments. Many times a serious injury will lead to that injured employee missing work. The policy also can cover the payroll for that employee during that time - this is known as indemnity. This is standard worker's compensation that covers the employer for the cost of the above named benefits due an employee after an injury or illness.
Part 2 is just as vital to understand - Employers Liability. This part of the policy DOES have limits that you, as a policyholder, choose when binding the policy - bodily injury by accident (each accident), bodily injury by disease (each employee) and bodily injury by disease (aggregate or policy limit). This is coverage for the employer when they are liable for the employee's work-related bodily injury or illness. Essentially, Workers Comp is for when the injury or illness was a result of an accident under normal conditions. Employers Liability comes in when the injury or illness was a result of a working condition that the employer is responsible or liable for.
The last point to make here is that your commercial umbrella policy is the excess coverage over this part (Part 2) of the workers comp & employers liability policy, as long as the work comp policy is listed as "Underlying". Again, the Part 1 coverages are statutory and would not transfer to an excess liability layer. The Employers Liability coverage should be included in your commercial umbrella policy.
Part 3 is referred to as Other States Insurance. As previously stated, the policy falls under the laws of the State where it is written - an Oklahoma business performing work in only Oklahoma will show "None" in this section of the policy declarations. However, if you do perform work in another state you must provide that information prior to binding the policy. Different states have different laws, so you pay a different premium. Many carriers have a statement in this section about notifying them (the insurance company) within a certain time period of any changes to the list of states where you work. While this absolutely includes you and/or your employees performing work in another state, it would also include traveling to or through other states for work conferences or meetings. Typically a notice about these temporary Other States operations would lead to an endorsement to the in force policy to expand coverage.
So there you have it, a quick explanation of the first 3 parts to your Workers Compensation and Employers Liability Insurance Policy. The other parts are just as important and will be covered in a later blog.
Let us know if you learned anything here, or were reminded of something you once understood. Send me an email at commercial@smithsonsinsurance.com or give us a call - (580) 353-0668.