How to Cancel a NY State Insurance Fund Workers’ Comp Policy: Very Carefully!

Cancelling a New York State Insurance Fund Workers’ Compensation Policy

There are special  rules for employers with a workers’ compensation policy with the New York State Insurance Fund (NYSIF), (the Fund) who wish to switch to a private carrier.  

Rules are spelled  out in Section 94 of the Workers’ Compensation Law for how this is done but adding a few more measures makes the process far more certain – and loose ends have been known to cause substantial, but unnecessary, expense.

If you wish to leave the NYSIF do this:

1.  First get a new policy  with an effective date of coverage comfortably greater than 30 days into the future.
2.  You need to give NYSIF 30 days notice of intention to cancel MEASURED FROM THE DAY IT RECEIVES YOUR NOTICE.
3.  You must also have a new policy ready to assume coverage, without lapse, from the date of cancellation with the NYSIF.
4.  When the NYSIF receives your notification of intent to change coverage  NYSIF  must notify the WCB, in writing, of the proposed change in coverage AT LEAST ten days prior to the date of cancellation. Ten days after that, the process of cancellation will begin.

If the NYSIF does not  notify the Board properly, coverage with the Fund will continue until it complies. This can be the source of much trouble since the Fund will continue to bill for premium at an enhanced rate, even though a new policy is ready to assume coverage and the delay is no fault of the employer.

ALWAYS, ALWAYS, ALWAYS
ALWAYS copy the WCB  Compliance Unit on intention to change coverage and include proof of a new policy with the letter. Send the communication certified with return receipt requested.

ALWAYS send proof  of new coverage to the NYSIF with the letter notice of intention to leave the FUND.

ALWAYS notify  the Fund by express mail, certified letter, return receipt requested and make sure that notification arrives MORE than 30 days prior to change in coverage.

ALWAYS mail  to the Board Compliance unit a copy of the signed return receipt from the NYSIF. Keep copies of all correspondence.

These Steps Are Important Because????

Even though  sending a copy of the new coverage to the Fund is not necessary, and it is not necessary to copy the WCB, those extra measures will serve an employer well if any later dispute arises.

The Fund remains liable  and the new coverage does not go into effect until the Fund properly completes its own responsibilities. The Fund may charge for the extended coverage but it may have to refund surcharges attached to extended periods that were due to its own failure to notify the Board in compliance with Section 94. The new carrier  should be asked for adjustment of its premium if the Fund has caused extended coverage to occur since the new policy CANNOT  go into effect until the Fund’s coverage ceases. These rules, which do not apply when the NYSIF is not a carrier, were intended to guarantee that there is no lapse in coverage AND no periods of duplicate coverage. (workersxzcompxzkit)

NYSIF is an insurer.  Like all insurers, it has fiduciary responsibilities to the insured and may NOT benefit from its mistakes should these mistakes result in extra expenses.

Author: Attorney Theodore Ronca  is a practicing lawyer from Aquebogue, NY. He is a frequent writer and speaker, and has represented employers in the areas of workers’ compensation, Social Security disability, employee disability plans and subrogation for over 30 years. Attorney Ronca can be reached at 631-722-2100.

We are accepting short articles* (200-600 words) on WC cost containment. Contact us at: Info@WorkersCompKit.com. *Non-compensable.

This entry was posted on Tuesday, September 15th, 2009 at 6:33 pm and is filed under Broker Issues & Relationships, Insurance Issues, Rates, Premiums, NY Workers Comp Issues. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.