Saturday, October 11, 2008

Workers' Compensation FAQs

Frequently Asked Questions - Workers' Compensation

Question: How does workers' compensation protect the employer?

Answer: Your workers' compensation policy protects you as an employer from any lawsuits arising from your employees where you or your company are declared negligent.

Example: Your employee makes you as employer aware that there is a cracked ceiling tile that needs to be replaced. A week later the ceiling tile is not replaced and falls on the employee injuring the employee and causing damage to his/her eyes. You may be liable in a lawsuit as the potential risk was brought to your attention and necessary corrective/safety measures were not taken.

Question: How does workers' compensation protect my employees?

Answer: Your workers' compensation policy covers your employees two fold. First it covers your employees should they be harmed while on the job for medical damages. Secondly, it subsidizes your employee for lost wages if they are unable to work due to a work related injury.

Question: How can I lower my workers' compensation insurance premium?

Answer: There are many ways items that you can look at when assessing if you qualify for a lower workers' compensation premium. We recommend that you consult with your agent as some of these items may or may not apply to your state. I have listed a few below.

1. Create and maintain a safety program
2. Review and monitor your Experience Modification Rate
3. Mulit-Policy Discount - When you have your business policy and workers' compensation policy with the same company.
4. Review your coverage limits.
5. Review your employee and payroll amounts estimated at the inception of your policy.

Question: If an employee is injured, is there a limit on the amount of medical coverage?

Answer: In some states the medical coverage portion of your workers' compensation policy for injured employees is unlimited. Which means if your employee is injured and will need home health care for the rest of his/her life; the insurance company will pay for necessary medical damages.

Get a free workers compensation insurance quote today.

Question: Does my policy have a maximum limit for the employer?

Answer:Yes, Employer's limits are stated on your policies "Declarations Page". They are usually stated in a similar format as below"


Question: How do the employers limits of 100/100/100 work?


Definition of each Coverage Level:
- $100,000 in coverage for injury by accident – each accident max
- $100,000 in coverage for injury by disease – each employee
- $100,000 in coverage for injury by disease – policy limit

NOTE: It is important to note that you can increase these limits to different combination amounts. The maximum limits are usually $1 Million/$1 Million/$1 million. These limits may vary from state to state.

Question: How do I report a workers' compensation claim?

Answer:In most cases, all you would need to do is call your policy's claim department and they will assist you through the entire process. They will facilitate in completing all necessary forms required by you as the employer, the employee and medical facilities.

Question: Should I request a drug test if an employee is hurt on the job?

Answer: It is currently common practice for employers to require their employees to submit to a drug test as part of the process in a workers' compensation claim. This will help protect you in the event the employee submits a lawsuit against your company and may or may not make him/her eligible for benefits under your workers' compensation policy.

We recommend you consult with your agent and applicable state laws for a clear answer.

Question: How much will my policy pay an employee for lost wages?

Answer: It is important to state that this portion of your workers' compensation policy is determined by your domiciled state. The amount of compensation given to an injured employee for lost wages is usually about 50% of his/her current pay.

Question: How do I add a saftey plan for my business?

Answer:In some cases your insurance company can come out and perform a complete assessement of your business and crate a plan for you. Contacting your local OSHA office is a great resource.

Question: If my employee is driving to the bank to make a bank deposit for my business is he/she coverred under my workers' compensation policy?

Answer:Yes, Employees are coverred while performing duties on behalf of the company.

Question: Will my policy extend to new businesses I create?

Answer:No, if you create a new business you will need to purchase a seperate workers' compensation policy to cover that business.

Question: If my employees sue my business for an injury do I submit it under my business policy or workers' compensation?

Answer: Employee injured on the job that submit a lawsuit against your business do to work conditions that you were made aware of prior to their injury would be submitted on your workers' compensation policy.

Should a customer or third party sue your company for any other reason, you would want to refer this type of claim to your business policy coverage.

Get a free workers compensation insurance quote today.

Posted By:

DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.

What is my Experience Modification Rate?

Experience Modification Rate (Experience Mod) - Lower your premium

What is your experience modification rate?

It is important to first state that your company's experience modification rate only applies to your workers' compensation policy. In simple terms, your "Experience Mod" compares your workers’ compensation claims experience to other employers of similar size operating in the same type of business. If you have less claims than other companies of the same size and industry you will receive a higher Experience Mod ratio. This ratio is used against your annual premium and results as a discount. Experienced companies that monitor their workers' compensation premium understand and utilize their Experience Mod annually.

Understanding your experience modification rating and monitoring it regularly is key in reducing your Workers’ Compensation costs. It is also an excellent measure of how your loss prevention and control practices stack up to others in your industry. Companies who effectively manage their Safety Programs not only understand how this works but also have assigned someone to monitor this on a regular basis. It has a direct correlation to how much you pay in Workers’ Compensation Premiums.

Reviewing your policy with your agent to confirm that your Experience Mod is taken into account when calculating your annual workers' compensation premium is always recommended.

Finding your Experience Modification Rate

Typically you will receive an Experience Modification Rating Sheet each year prior to your policy renewal date. If you are unclear of your companies current Experience Mod your insurance agent can help you locate this. Your Experience Mod is also listed on the declarations pages of your workers’ compensation policy

Effects outside of discounting your premium.

Many safety conscious corporations are refusing to use the service of venders or subcontractors who do not control their Experience Mod or have an experience modification in excess of the industry average.

Qualification for an Experience Mod and Calculation.

Most companies who's annual premium is in excess of $3,000 will receive an Experience
Modification Rate.

Your Experience Mod is calculated by the National Council on Compensation Insurance (NCCI) or in some states an independent agency. Your insurance agent can advise you where yours is calculated.

Each year insurance carriers report to the calculating agency your class codes, payrolls and losses for the last five years. The computing agency uses three complete years of data ending one year prior to the effective date of the rating period. For example, a rating in 2005 normally will not use 2004 but would include 2003, 2002, and 2001 in the formula.

Don’t forget about your current years claims. These usually present the greatest opportunity
for cost reductions. Remember this years claims will affect your Experience Mod next year.

Example of Experience Modification Rate applied to your premium

While the formula may appear complex, it compares your specific payrolls and losses to the industry average losses for like business of similar size. If you are at the industry average, your Experience Mod is a 1.0. If your experience is 20% better then average your Experience Mod would be a .80 or 20% worse would be 1.20.

It makes sense to reward companies that practice effective safety and claims management techniques over those who do not. In effect, the Experience Mod does just that. The example below illustrates the difference between a company with a .80 Experience Mod versus a 1.20 Experience Mod.


The type of claims you experience and what you do to control the cost of claims has a significant effect on your Experience Mod.

NOTE: If you have zero claims you have no experience going into the formula. Not many companies are that fortunate.

  • Example 1
Class Payroll Rate Per Premium Code $100

Class Code 8810 =$8.5 per hundred in payroll
Annual payroll = $800,000
Annual Workers' Comp premium = $66,000
Experience Mod= 1.20 - $13,200 (20% better than industry)
Modified Premium $52,800

  • Example 2
Class Payroll Rate Per Premium Code $100

Class Code 8810 =$8.5 per hundred in payroll
Annual payroll = $800,000
Annual Workers' Comp premium = $66,000
Experience Mod= 1.20 + $13,200 (20% worse than industry)
Modified Premium $79,200

As you can see from the above example, how you control your Experience Mod can have a big impact on your insurance premium.

How claims affect my Experience Mod

  • Medical-only claims

    Claims that require medical treatment only are usually less severe so employers should not be penalized when they occur. Consequently, any medical only claims are reduced by 70% before they enter the formula. You can take advantage of this by ensuring that injured employees remain at work when possible or return to work within the waiting period.
    This is where an effective claims management and return to work program can have a dramatic effect. Should you need help in establishing a program, our Western National Loss Control Consultants can help.

  • Lost time claims

    The first $5,000 of a lost time claim is counted at full value. The dollar amounts after $5,000 is discounted. There is also a large claim cap limit to protect you from a catastrophic loss. Because the first $5,000 of each loss goes into the formula dollar-for-dollar, severity is a factor. A single claim valued at $20,000 has less effect on your Experience Mod then 10 claims valued at $2,000.
Companies seeking to minimize their workers’ compensation premiums should focus their safety efforts on reducing the frequency of lost time claims. If you are unsure what actions to take, our Loss Control Consultants can help you here also.

Tips & Reccommendations

Claim Management

To avoid claims:
  • Maintain and use an Accident Prevention Program
  • Develop a site-specific safety plan for each job
  • Have your company management support the Accident Prevention Program
  • Have the attitude “Safety Comes First”
  • Train your employees in safe work practices
  • Drug testing
  • Common sense
To minimize claims:
  • Investigate incident immediately to avoid second occurrence
  • Develop a Return to Work program. Have light duty jobs available if possible
  • Get the injured worker back to work ASAP, retrain if necessary
  • Manage the claims process; be proactive
  • Develop a Kept-On-Salary policy
Key business decisions to better manage your EMR:
  • Report all employee hours worked
  • Track incidents from office personnel, field personnel, and subsidiary divisions independently
  • Do not lump subsidiary companies under one EMR rate
  • Take a proactive approach to training, avoidance, and claim management
  • Designate a Safety Director and give that person the proper authority to affect policy, decisions, and personnel
  • Work with Washington State Labor and Industries and OSHA representatives when they visit the jobsite
  • Realize that the money spent now on safety can save you much more later on.
By properly managing your EMR you will save time and money. By implementing a safety program and training personnel in safe work practices, companies can prevent accidents and save lives.

It is also recommended that companies review their losses periodically. Pay particular attention to open claims with outstanding reserves. Work with your claims administrator to bring these claims to closure. In some instances, outstanding claims may be closed resulting in reserve reductions that ultimately may affect your Experience Mod.

The National Council on Compensation Insurance (NCCI) has published a booklet entitled “ABCs of Experience Rating”. It is available on their website at This brochure explains the experience rating plan in greater detail. Many states that use independent agencies to calculate the experience modification also have prepared brochures to explain the Experience Modification Rating Process.

Get a free workers compensation insurance quote today.

Posted By:

DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.

Friday, October 10, 2008 Linkedin Group invites you to join our insurance professionals networking group on We are always posting information related to the insurance industry and have created a group for insurance related professionals to join, contribute, and network with one another.

To join our group click here. We encourage you to post discussions, ask questions, and meet new people that may be able to assist you in your business. Should you find this network useful and feel it can help others in your linkedin circle, feel free to forward this post and ask that they join.

We at would like to thank you in advance for support.

Get a free insurance quote today.

Posted By:

DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.

Saturday, October 4, 2008

Homeowners Insurance FAQs

Frequently Asked Questions - Homeowners Insurance

Question: Why do rates differ so much from company to company?

Answer: Insurance companies spend millions of dollars to research their clients, each geographic area, vehicle safety ratings and homeowner claim statistics are among many factors in order to determine their prices and target market. Some companies feel that they want grow specific areas of their books such as zip codes with lower claims statistics. Others may focus more on the investment non-owner occupied properties. Companies change discounts and rates based on what they feel their company needs in order to grow in clients and in profits. This is why companies change rates and discounts so frequently.

Question: How can I lower my insurance premium?

Answer: In many cases by adding your home and auto insurance with the same company can account for large savings. There are many different ways to lower your insurance premium. I would recommend first setting an appointment with your agent to review your policy. This should be done at least once a year. In some cases, just by evaluating your policy with you agent you may find new discounts the company offers that they did not when you started your policy. Homeowners insurance is very competitive from company to company and discounts change frequently.

Question: How does "Loss of Use Coverage" on my homeowners insurance work?

Answer: Loss of Use coverage would provide your family with a comparable place to live should your home be declared uninhabitable due to a covered loss in your homeowners insurance policy. In most cases your policy would cover the initial items such food if you have to move to a new location because you apartment is no longer inhabitable to to a loss such as a fire. Most insurance companies are willing to help during the transfer process.

Question: What does a claims adjuster do?

Answer: A claims adjuster's primary role is to investigate your insurance claim and evaluate your insurance policy to determine if the insurance company is liable for payment. A good way to look at your claims adjuster is as your insurance agent for your claim. A claim adjuster understands every endorsement and exclusion within your insurance policy and is a great resource for questions regarding your claim. In most cases your agent cannot directly answer legal questions regarding your claim and will forward you to your claims adjuster for such answers.

Get a free homeowners insurance quote today.

Question: Does my homeowner policy cover floods?

Answer: No, In order for your home to be covered for a flood loss you will have to purchase a stand alone flood policy through the National Flood Insurance Program (NFIP).

According to the NFIP the average flood insurance policy is $500 per year.

Question: Will my homeowner policy pay for my air condition or other appliances?

Answer: In most the answer would be NO. The only way that your appliances would be covered in a loss is if the loss specified in your policy such as a fire.

If you appliances stop working due to normal breakdown or wear and tear, they would not be covered. In order to cover your appliances you would need to purchase a "home warranty Policy". Home warranty policies cover your appliances and other items should they break down within their policy stipulations.

Question: What happens if my home is vacant and is vandalized?

Answer:Your policy contains a co-insurance clause that details how your policy would pay should you have a loss and your home is deemed to be vacant at the time of loss. Each policy treats these instances differently and your claims adjuster would be a good point of reference for interpreting payout of your policy. Contacting your agent will give you an better understanding of this prior to a loss.

In most cases your policy will pay at a significantly lower coverage limit than stated on your policy. Some policies will pay at a percentage of what you policy limit states. Such as 80% of your policy limit where as if your property were occupied at the time of loss it would be 100%.

Question: Does my policy cover hail damage?

Answer:Yes, almost all homeowners insurance policies cover hail damage as a standard peril.

Question: Does my policy cover earthquake damage?

Answer:No, but you may be able to add it to most insurance policies. You may also purchase it as a stand alone policy in some states. In other states you may purchase a policy from the state in which you reside such as California.

Question: Does my policy cover mold?

Answer:Maybe, mold damage has been covered where it results from a covered peril, such as a broken pipe, a storm, or fire suppression efforts, but not where it occurs gradually over time due to wear and tear. We recommend consulting with your agent in order to have clear understanding on how your policy would cover mold damage as it may be different from policy to policy and state to state.

Question: How does my liability coverage work?

Answer: Liability coverage is a very important and complicated section of your insurance policy. In basic terms, it would cover you should you be found negligent in the harm of a person not living in your household or actions occured on your property and in some cases outside of your home's premises. It would provide assistance in a lawsuit arising from these and other liabilities initiated on your behalf. We recommend that you consult with your agent for in depth understanding of your liability coverage.

Question: What is the limit for cash, should I have a break-in and money is stolen?

Answer: Usually policies have a limit on cash losses. This is between $100-$500.

Question: How do I add coverage for specific high value items such as jewelry, collectibles, fine china, etc.?

Answer: You will usually have to start by having your item(s) appraised. This may be waived if your product is new or your appraisal is within 6 months old. Next, take pictures from many angles. Finally, take all of these items to your agent who will forward these items to his/her underwriting department for approval. Your items will not be covered until approved by the insurance company underwriter and payment for the additional coverage is remitted.

Get a free homeowners insurance quote today.

Posted By:

DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.

Renters Insurance 101

What is renters insurance?

Renters insurance is designed to cover a person's personal property should it be stolen, vandalized or damaged due to a covered loss from a property that he/she is renting. Most companies extend coverage for your personal property stored in other locations as well. An example would be property stored in a storage unit while your are in the process of moving. Although most people believe that this is the only coverage provided within a renters policy, this policy actually contains coverage for many other risks that may affect a renter.

How am I covered?

I have detailed coverage below to illustrate the most common type of coverage within a typical renters policy.

I will start by defining actual cash value and replacement cost as these are very important renters insurance policy attributes. You will have to determine which of these coverage definitions your policy falls into. It is important to understand that you can usually change between the three by calling your agent and updating your policy. All changes must be completed prior to a claim on your policy as this change will affect the payout of your claim significantly. The most common coverage type is extended replacement Cost.

  • Actual Cash Value – Is the value of your personal property minus a deduction for age, wear and tear and other factors

  • Replacement Cost – This coverage type would pay the amount necessary to replace the item with an exact or like kind. No depreciation is subtracted from the value.

Get a free Renters Insurance quote today.

I have detailed the common homeowners insurance policy coverage below:

  • Personal Property – This limit is the maximum the company would pay to replace any of your personal items such as TV, clothing, jewelry and cash in the event of a covered loss.

NOTE: It is important to understand that by default your renters policy will not cover cash for more than $100 to $200. Collectible, Fine China, Jewelry and such items will also have a cap in coverage. Such items must be added on to your policy as a floater or endorsement which may require an appraisal to be insured at full value. This may also add additional costs to your policy.

NOTE: It is important to know whether your personal items are covered under actual cash value or replacement costs. Actual Cash Value will pay at the depreciated value and replacement cost will pay the amount necessary to replace the item with an exact or like kind.

  • Loss of Use - This is the limit the insurance company would reimburse you for additional living expenses to maintain your normal standard of living. This would be granted should your property be rendered uninhabitable due to a covered loss.

  • Personal Liability - This is the limit the insurance company when you are legally obligated to pay for bodily injury or property damages to others resulting from events such as Acts of your pets, Use of your premises (Such as swimming pools), Unintentional acts committed by your or a qualified household members (either on or off your premises). Your personal liability coverage also includes coverage for expenses such as attorney fees, court costs, investigator fees and witness charges when defending you in court. In most cases they will pay you for your time off of work when you are asked to appear in court. All policies handle this differently so it is important to consult with your agent to have a clear definition of how your policy covers personal liability.

NOTE: All renters insurance policies handle this differently so it is important to consult with your agent to have a clear definition of how your policy covers personal liability.

  • Medical Coverage – This is the limit the insurance company would pay for any monies incurred by any non-household member for bodily injury on your premises. This is basically a medical aid to others should they have a bodily injury at your residence such as a slip and fall, etc.

  • Deductible - Your deductible amount is the amount of money you are responsible for as the insured before the insurance company begins payment.

What additional coverage can I add?
These are just a few additional options that may or may not be available with your policy. It is always important to consult with your agent to find out all of your options so that you may make the most educated decision on which fit your needs best.

  • Add Replacement Cost on Personal Property Coverage
  • Add Identity Theft Coverage
  • Add Jewelry, Collectibles, Fine China Endorsement
  • Add a Personal Umbrella

These are a few discounts that your policy may offer. It is always recommended that you consult with your agents to see which of these may apply to your policy.

  • Gate Community Discount
  • Security System Discount
  • Multi-Policy Discount – When insuring your autos and your home with the same company
  • Good Credit Discount

Payment Options:
Your Renters Insurance Policy has a few different payment options.

  • Annual
  • Semi-Annual
  • Monthly

These are a few recommendations we have regarding your homeowners insurance.

  • Review your policy annually with your insurance agent.
  • Complete a Contents Inventory Record in order to itemize your personal property, should you have a fire loss. Your agent should be able to provide a copy and will retain it for you.

Get a free Renters Insurance quote today.

Posted By:

DISCLOSURE: All entries by are for informational purposes only and it is always recommended that you consult with your local insurance agent as coverage, definitions and claims procedures may differ from state to state.