Public Employers Workers Comp Audits Now Due
The public employers are due for a premium audit very soon.
A large number of our clients are public entities. Most of them are self insured or at least partially self insured. There are still a large number of smaller public employers that buy regular insurance from the marketplace.
Most public employers’ budgets cover from July 1 until June 30 of the next year. There is a schedule that most insurance carriers follow. Usually, within 60 days after a policy has expired, the insurance company auditor will make a visit and audit the books to set a final premium.
One area that seems to cause a large amount of confusion about public employer premium audits is the area of subcontractors. As there are usually many departments in, for instance, a school district, there can be many independent contractors working simultaneously. If the premium auditor is left to guess if the worker is an employee or subcontractor, they are almost always going to designate the worker as an employee.
Certificates of insurance should be obtained from all subcontractors and be attached to their contracts. We have recently seen where even though the contractor’s employees were working under a certificate of insurance and a contract, they were still ruled as employees by the auditor. Providing these to the premium auditor may save headaches and $$.
Certificate of insurance tracking is also important. If the subcontractor’s certificate of insurance and policy expire during their contract, a current one must be obtained immediately. A premium auditor may designate the subcontractor as an employee if their certificate of insurance expires during the subcontract.
A suggestion is that a person be designated to keep track of the subcontracts and the certificates of insurance. A diary system such as Outlook(R) can be used to track certificates of insurance expiry.
Why I am particularly sensitive to certificates of insurance is that one of the local school systems had a subcontractor working for them for several years. Their task was to remove trees and shrubs. The certificate of insurance had expired two weeks before the subcontractor fell off a ladder, landed on his head, and passed away after three weeks in ICU.
The school system had to pay a death claim and extremely large hospital bills out of their own budget as their carrier denied the claim. I think their workers comp carrier did finally pay some of the bills but then canceled them mid-policy.
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