If your workers’ compensation policy has lapsed, don’t panic but do act quickly, because, believe it or not, even just one more day without coverage can make a difference.
First, immediately call your agent or broker and explain your situation. If this is your first lapse in coverage and the policy expired less than 30 days ago, your agent or broker might be able to reinstate your policy with the incumbent carrier but it’s not a given.
Whether or not the underwriter is willing to reinstate coverage retroactively to the expiration date may depend on several factors including your payment history and whether you have other policies with the carrier and their payment histories. Part of the underwriter’s job is to take well-calculated risks. Lapses in coverage may create the appearance that your company is not an attractive risk or even that your company is struggling financially.
Placing coverage with a new carrier following a lapse is more challenging for your agent/broker than replacing coverage with an in-force policy. An underwriter with the incumbent carrier or a new carrier may require a “no loss letter” from you confirming no new injuries occurred during the lapse. Full disclosure is important. Tell your agent or broker about any injuries or work related illnesses occurred during the lapsed period.
Very importantly, take steps to be sure a lapse in your workers’ compensation coverage doesn’t happen again. You might be given a “free pass” once by an underwriter but if it happens a second time, you’re likely going to be out of luck with that company. Consider scheduling your payments by EFT (Electronic Funds Transfer) to prevent non-payment or late payment of premium. If you pay bills online, schedule the payment in ample time to reach your agent/broker or your carrier, including mail delivery times in your area. Set a date on your calendar to send the payment, or do whatever it takes.
The consequence of having no workers’ compensation insurance can carry a heavy price. Beyond being out of compliance with the law, your company continues to be responsible for payment of claims, regardless of whether you have insurance coverage.
ACTIVELY manage your insurance policies to be certain they’re all current. These policies not only provide peace of mind knowing you’ve transferred significant risk to another for a price, but also meet your legal insurance requirements.
Author Robert Elliott
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Do not use this information without independent verification. All state laws vary. You should consult with your insurance broker or agent about workers’ comp issues.
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