What?! A Workers Compensation Policy Has 3 Parts To It?

Most insureds are familiar with what a worker’s compensation policy is and what it is intended uses are, however, what most insureds do not know is that every worker’s compensation policy has threeparts. The general lack of knowledge regardingthe existence of this third part of the policy could cause a big problem for an insured.  Let me review each of these parts for you.

Part 1

Part 1 of a worker’s compensation policy is where an injured employee gets coverage for workplace injuries. This section of the policy does not have policy limits associated with it.

Part 2

Part 2 of the workers compensation policy is the Employers Liability section. This section of the policy covers employers if a suit is brought against them for their negligence in a work place injury.

Part 3

Part 3 of the policy identifies the state(s) that the workers compensation benefits apply to. This section of the policy has 2 subsections: A & C.

3A – This subsection names the states in which workers compensation coverage is required by eligibility tests.

3C – This subsection names all of the other states in which specified states benefits will be paid by the policy.

In the past 5 years, Part 3 of the workers compensation policy has not changed. What has changed is how the state courts are interpreting this section of policy. This has had a tremendous effect on coverage for many policy holders. There are now states that require that they are listed in subsection 3A even if an employee is simply driving through their state. This can become very problematic if the insurance carrier providing coverage has not filed to write insurance in the state that is requiring 3A status. This can lead to headaches and even worse, uncovered claims.

Bottom line…. A workers compensation policy is more complicated than you might think. If your agent is not discussing these issues with you, you may be at severe risk of not having the proper workers compensation coverage. Contact your agent or call any of our nine FBinsure offices to discuss your policy in detail to ensure that you are properly protected.