Workers compensation insurance is required by state or federal law for nearly all employees. The statutes that require workers compensation insurance were developed in the early 1900s in an effort to compensate employees for injuries suffered on the job, regardless of whether their employers were negligent or not. In return for guaranteed workers compensation benefits, employees gave up the right to sue their employers. Workers compensation insurance became the exclusive remedy for employee-injury compensation. The statutes provide medical and lost wage benefits, and employers who are subject to the laws must carry workers compensation insurance or become qualified self-insured employers.

A few states permit employers to opt out of the law and revert to a negligence-based system. States also may exempt certain classes of employees—such as casual, agricultural, or domestic employees—and smaller employers who have only one or very few employees. There also are some legal theories that have eroded the exclusive remedy doctrine. However, despite these exceptions, workers compensation and employers liability insurance remains an important area for most commercial accounts. Private, nonbusiness accounts also should be reviewed for employment exposures, especially in the area of domestic and agricultural employees. Even if the employer or class of employee is exempt from the law, employers may incur great expense if an employee is injured while on the job.

Use the following checklist to determine whether exposures, coverages, and possible financial programs have been appropriately addressed.

Workers Compensation and Employers Liability Checklist

General Information

Named Insured:

D/B/A:

Address:

City, State:

Phone:

NCCI or State WC Number:

Federal Employer ID Number:

Named Insured is a:     _____Individual     _____Partnership     _____Corporation
          ____Limited Liability Corporation     _____Joint Venture     _____Other

General business operations:

States in which insured has operations:

States in which insured may begin operations within next twelve months:

Location addresses:

Loss control contact name/phone number:

Coverages

____     1. Workers compensation coverage in place?

____     2. Employers liability coverage in place?

____     3. Other states insurance?

____     4. Employees traveling outside U.S./foreign voluntary compensation?

____     5. If foreign travel, repatriation limit?

____     6. If foreign travel, endemic disease coverage included?

____     7. Any permanent foreign operations? (Review laws of country for requirements)

____   8. Review appropriateness of foreign accident/health and foreign workers compensation coverage for foreign nationals or individuals assigned to foreign operations.

____     9. Deductible amounts?

Coverage through Federal Law Endorsements

____     10. Defense Base Act

____     11. Federal Coal Mine Health & Safety Act

____     12. Federal Employers Liability Act

____     13. U.S. Longshore & Harbor Workers Act

____     14.  Jones Act/Maritime Coverage

____     15. Nonappropriated Fund Instrumentalities Act

____     16. Outer Continental Shelf Lands Act

____     17. Federal Employees Compensation Act

Coverage through Miscellaneous Endorsements

____     18. Alternate Employer Endorsement

Limits of Liability

____1. Bodily injury by accident

____2.  Bodily injury by disease (policy limit)

____3. Bodily injury by disease (each employee)

Exposure Considerations

____     1. Does insured have other insurance or is it a qualified self-insurer?

____     2. Contractual (assume liability)?

____     3. Operations outside the U.S.—travel or permanent operations?

____     4. Second injury fund exposures?

____     5. Any domestic employees?

____     6. Any agricultural employees?

____     7. Any migrant/seasonal employees?

____     8. Need for voluntary compensation coverage?

____     9. Any leased or temporary employees?

____     10. If so, is a contract in place?

____     11. Is lessor or lessee responsible for wc benefits?

____     12. Do any employees work from home?

____     13. Is telecommuting policy in place?

____     14. Any minors employed?

____     15. Are laws regarding employment of minors being enforced?

____     16. Any operations in monopolistic states?

____     17. Is WC coverage through monopolistic state being provided?

____     18. Stop gap coverage for monopolistic states needed?

____     19. Any federal WC exposures?

____     20. Any USL&H exposure?

____     21. Aircraft exposures?

____     22. Any group transportation?

____    23. Do subcontractors carry wc insurance? Be sure certificates of insurance are provided & reviewed.

____     24.  Any industrial hygiene exposure?

____     25. Are IH tests needed?

____     26. Any volunteer labor?

____     27. If volunteer labor is used, do states permit workers compensation coverage to be extended to it?

____    28. Should some type of insurance—workers compensation or accident/health—coverage be provided for volunteers?

____     29. Any wrap-up plans?

Special Considerations

____     1. Has insured ever been cancelled or non-renewed?

____     2. Does insured have an active & effective loss control/safety program in place?

____     3. Has insured ever been sued by employees or former employees?

____    4. Are operations being down-sized or have they been down-sized in last three years?

____     5. Are currently valued loss runs for last five years available?

Employee Classifications and Experience Modifier Issues

____     1. Are employees classified in the lowest rated classifications possible?

____    2. Has payroll for standard exception classifications—such as clerical—been accurately segregated from higher rated classes?

____     3. Are most current payroll estimates consistent with most current payroll audit?

____    4. Is payroll classified correctly?

____    5. Has executive payroll been adjusted to reflect state minimum & maximum levels?

____     6. Are entities with common ownership combined for experience modification purposes?

____     7. If any entity/subsidiary newly acquired, review how prior experience will affect experience modifier.

____     8. Is account large enough to qualify for experience modification?

____     9. Has most current experience modifier calculation been reviewed for accuracy?

____     10. Has suspense been set up for unit statistical filing?

____    11. Has suspense been set up for claim and reserve reviews prior to unit statistical filing?

Financial Analysis

____     1. Have all possible rate deviations and discounts been applied?

____    2. Is a cash flow program—such as a retrospectively rated or large deductible plan—applicable?

____    3. Have prior dividends, retro adjustments, collateral adjustments, and experience modifier calculations, etc., been accurately completed?

____    4. Should the insured assume a small deductible plan or consider paying medical bills internally?

Individual State Considerations

____     1.  Review applicable state laws for inclusion/exclusion of overtime and bonus pay.

____     2. Should partners be included or excluded from coverage?

____     3. Should executive officers be included or excluded from coverage?

____     4 Do state(s) covered have second injury funds?

____    5. Are state exemptions for certain classes of employees—such as casual or domestic—contemplated in the program?

____     6.  Is workers compensation still the sole remedy for employee injuries in the states covered?

____     7. Do states where operations are located permit employers to opt out of workers compensation and revert to a negligence-based system?