Workers Compensation is perhaps the trickiest of all insurance programs to understand and that makes being in compliance with state law a question of faith in the expertise of the placing agent. Although most states follow similar rules and guidelines, each state administers its own workers compensation statute. Each state has its own rate filings, payroll rules and owner participation guidelines.
While most states allow for competition amongst private carriers for business they wish to write, some states operate under a monopolistic regime. The statutory benefit portion of a Workers Compensation policy covers compensable claims for injury or disease under a strict liability system. The statute dictates the degree to which the employee is compensated for medical bills as well as for lost wages.
Employer’s Liability allows for tort claims resulting from specific causes of action that are outside of the areas covered by the statutory benefit program. Each insured must be certain he has adequate Employer’s Liability limits in all jurisdictions where he operates.
Insurance agents handling Workers Compensation coverage for their clients must be diligent in keeping up with the many changes that occur in the statutory benefits area. This requires an open, two-way communication between agent and client. The client should be encouraged to call the agent when entering a new state for work. The agent must then be certain that all territories where his client operates are properly covered. In addition, assuming the client has properly notified his agent of work conducted in different states, the agent must be sure that Employer’s Liability coverage is afforded everywhere the client is exposed. The agent should also advise his client about the proper way to administer sub-contractors. Any misstep can result in severe penalties from the state Worker’s Compensation Commission, or worse, in a large uncovered claim.
All of this confusion can result in an E&O situation. Mr. Sapourn has worked with thousands of clients in these areas and he knows the Standard of Care required of the writing agent.