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How are my premiums set?
Premiums are based on the employer’s industry
classification code, past loss history and payroll. Premiums for the
most dangerous enterprises, such as trash hauling or logging, may be
much higher than premiums for an accounting firm.
Location also has become a factor in workers comp
premiums. Since the terrorist attacks of Sept. 11, 2001, workers
compensation insurers have been taking a closer look at their exposures
to catastrophes, both natural and man-made. For businesses located in an
area at high risk of catastrophe, premiums may be higher, regardless of
the nature of the business itself.
Employers with an annual premium above a certain
amount usually are eligible for experience rating, which adjusts the
premium up or down depending on the claims history of the company
relative to other companies in that industry category. Businesses with
higher than average claims will pay a higher premium and those with
lower claims will generally pay less.
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Experience rating is more sensitive to the number
of claims (loss frequency) than the dollar value of claims (loss
severity). This is because of the insurance industry maxim, “frequency
breeds severity.” Insurers know from experience that where more
accidents occur, there is a greater likelihood of big losses. A greater
number of accidents indicates that overall working conditions are not as
safe as an environment where fewer accidents occur, even if in a given
year the few accidents that occurred were more costly.
What are my costs for workers comp?
Your costs include insurance premiums, payments made under
deductibles and the administrative costs of monitoring claims and making
reports to the state and your insurer.
What does my policy cover?
Like most workers comp policies,
Harleysville’s has two parts: "Part One, Workers Compensation" and "Part
Two, Employers Liability."
Under "Part One,” the insurer contracts to pay
the injured worker’s medical costs and whatever the state-required
amounts of compensation may be. Unlike other types of insurance, workers
comp coverage has no ceiling or limit on the policy amount. The
insurance company accepts a transfer of the employer’s entire statutory
obligation—whatever the employer is legally obligated to pay as a result
of the injury.
"Part Two" of the policy provides coverage for an
employer who is sued by an employee for work-related bodily injury that
isn’t subject to state statutory benefits. It has a monetary limit.
Employers' liability also insures an employer in
some other situations. One is so-called “third-party over suits,” where
a worker hurt on the job files suit against someone other than the
employer (a third party) and that third party then seeks to hold the
employer responsible. For example, an employee injured while working
with a machine might file suit against the manufacturer of the machine.
The manufacturer might then sue the employer claiming that the cause of
the injury was modifications the employer made to the machine or
improper use. Another situation where this liability coverage applies is
when the spouse of an injured worker sues the employer for loss of
consortium.
What are my obligations?
In most states you are required to keep
records of all workplace accidents. You must report job-related injuries
to the state workers compensation board and to your insurer within a
specified number of days.
To learn your state’s specific workers
compensation rules and regulations, start by locating its key contact
information in
“All 50 States’ and D.C.’s Home Pages
and Workers’ Compensation Agencies.”
Questions?
Contact your independent Harleysville agent with questions about any
of the information provided in this section—or in other parts of our
claims site. Don’t know the name of your company’s agent? Call
Harleysville’s customer support staff at 866.577.9040.
Back to "Understanding
workers comp and your coverage" main page
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