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.
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.
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker about workers’ comp issues.
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