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Is The Workers Compensation Policy A Contract – Great Question


Workers Compensation Policy = Contract?

We received this question on the similarities or differences between a Workers Compensation policy and a contract two weeks ago.  Every few months J&L receives a few basic questions on workers comp that I should write more explanation or back-to-basics articles.

My older brother, David, who reads all of my articles and newsletters, has brought up more than a few times that the articles seem to get too deep into the weeds for a general audience to read and appreciate the articles.   He liked the article on former President Nixon’s administration examining Workers Compensation at the Federal level and the Elvis meets President Nixon pic.

Workers Compensation Policy – Contract Comparison

A few years back (more than a few), I was taught about the parts of a valid contract.  Let us look at those parts and compare them to a Workers Compensation policy.

Please note that this is not legal advice.  The following should be considered as Risk Management suggestions.

Five Parts of A Contract

The Five Parts of a valid contract are:

  1.  Offer made
  2. Acceptance
  3. Consideration
  4. Competency and capacity
  5. Legality or legal intent

Comparison To Workers Compensation

  1. Initial or Renewal Policy Forwarded to Insured Client
  2. Insureds Signature
  3. Initial Policy Premium
  4. Signature of the business owner or one of the officers who has signature authority
  5. The intent is to cover the insured’s employees for compensable on-the-job injuries.

Final Thoughts And Suggestions

Before one signs off on a Workers Compensation policy, one should always read the policy completely including the often unread endorsements at the end of a policy.  Check out an old but often-read article on DICEE – the five parts of any policy – including Workers’ Compensation.

DICEE is the easiest way to remember the parts of a policy if you are reviewing your policy before or after signature.

DICEE is an acronym for Declarations, Inclusions/Insuring Agreements, Conditions, Exclusions, and Endorsements.

pic of workers compensation policy contract
(c) Public Domain


James J Moore - Workers Comp Expert

Raleigh, NC, United States

About The Author...

James founded a Workers’ Compensation consulting firm, J&L Risk Management Consultants, Inc. in 1996. J&L’s mission is to reduce our clients’ Workers Compensation premiums by using time-tested techniques. J&L’s claims, premium, reserve and Experience Mod reviews have saved employers over $9.8 million in earned premiums over the last three years. J&L has saved numerous companies from bankruptcy proceedings as a result of insurance overpayments.

James has over 27 years of experience in insurance claims, audit, and underwriting, specializing in Workers’ Compensation. He has supervised, and managed the administration of Workers’ Compensation claims, and underwriting in over 45 states. His professional experience includes being the Director of Risk Management for the North Carolina School Boards Association. He created a very successful Workers’ Compensation Injury Rehabilitation Unit for school personnel.

James’s educational background, which centered on computer technology, culminated in earning a Masters of Business Administration (MBA); an Associate in Claims designation (AIC); and an Associate in Risk Management designation (ARM). He is a Chartered Financial Consultant (ChFC) and a licensed financial advisor. The NC Department of Insurance has certified him as an insurance instructor. He also possesses a Bachelors’ Degree in Actuarial Science.

LexisNexis has twice recognized his blog as one of the Top 25 Blogs on Workers’ Compensation. J&L has been listed in AM Best’s Preferred Providers Directory for Insurance Experts – Workers Compensation for over eight years. He recently won the prestigious Baucom Shine Lifetime Achievement Award for his volunteer contributions to the area of risk management and safety. James was recently named as an instructor for the prestigious Insurance Academy.

James is on the Board of Directors and Treasurer of the North Carolina Mid-State Safety Council. He has published two manuals on Workers’ Compensation and three different claims processing manuals. He has also written and has been quoted in numerous articles on reducing Workers’ Compensation costs for public and private employers. James publishes a weekly newsletter with 7,000 readers.

He currently possess press credentials and am invited to various national Workers Compensation conferences as a reporter.

James’s articles or interviews on Workers’ Compensation have appeared in the following publications or websites:

  • Risk and Insurance Management Society (RIMS)
  • Entrepreneur Magazine
  • Bloomberg Business News
  • WorkCompCentral.com
  • Claims Magazine
  • Risk & Insurance Magazine
  • Insurance Journal
  • Workers Compensation.com
  • LinkedIn, Twitter, Facebook and other social media sites
  • Various trade publications


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