Workers Comp and Expansion Into Other States
The 10 things to remember in Workers Comp and Expansion into other states.
After talking with a few premium auditors, adjusters, and from conversations with employers and our employer-clients, we have found a trend that needs to be pointed out to avoid a disaster. We have also recently been contacted by more than one employer that received an unexpected hefty premium audit bill to cover employees in a more expensive state.
Even though the economy is ailing, some companies are expanding into to other states to obtain business. There are a few considerations on Workers Comp when expanding into other states:
- You do not have automatic coverage for a binding period such as an auto policy. The first day that an employee works in another state than is on your policy could lead to a denial if you do not have coverage in that state.
- Even though your company may have coverage in certain states, an employee may file a claim in a totally different state than expected. We have seen this happen often with trucking companies.
It is critical that you alert your agent immediately (in writing) and inform the premium auditor during your yearly audit that you have employees that operate in other states than what is on your current Workers Comp policy. This will avoid a denial of coverage by your carrier.
- We do see All Other States coverage on some policies. They are becoming rarer over time.
- You could actually be owed a premium refund or credit if the state you are expanding into has lower rates with your current carrier.
- Your Workers Comp situation can become very messy if your current carrier does not write coverage in the expansion state.
- The situation can be even messier if you are expanding into a monopolistic state such as OH. Those employees have to be covered by a policy provided by the state and not your insurance carrier.
- Employers are being forced to pay some claims out-of-pocket. If that happens, you lose the right to fee schedule the medical bills and other rights. Your company may end up paying the full bill that is charged by each medical provider.
- Your company could be heavily fined for not covering your employees in a certain state.
- The bottom line is that you do not want the Workers Comp adjuster to be the one to inform you that your employee is not covered in a state.
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