Five Minutes Of Work Can Spot Ghost Policies
Ghost policies for Workers Comp coverage have been in existence for quite some time. I have seen so many of them over the years in the construction industry. There is a very easy way to check to see if the policy is a ghost policy.
The certificate of insurance may not be that clear. If a business owner obtains a policy then excludes himself/herself, this does not mean the policy is a ghost policy. Regardless, there is a very easy way to make sure:
- The policy has not been cancelled mid-term
- The number of workers covered
- Policy is not a ghost
- Proper states covered
When I asked this at a presentation, the #1 response was to call the agent. However, there is a more direct and up-to-the-minute method. The name of the carrier should be prevalent on the certificate.
A very brief online search will give you the WC carrier’s phone number. I have sometimes seen them listed on the certificates. Call the customer service number for the carrier. Using the policy number on the cert, you should be able to verify coverage, etc.
I have seen employers being slammed at premium audit time if the certificates dates do not cover the complete time the subcontractor worked for the employer. Avoiding the Ladder of Insurance(c) claims is another good reason to call the carrier directly.
Why not call the agent? The broker/agent will usually have current information to a point. The up-to-date info would come directly from the carrier. Some carriers may want the certificate of insurance faxed or emailed to them for verification.
This may cause the verification of the cert to take longer than five minutes, but it is better than paying for a huge claim or paying the premium for the subcontractor at audit time.
If your company is not monitoring the expiration of the certificates of insurance or not even asking for them, then be ready to have your carrier pay for an accident.
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