Complaint 2 of 3 in “Workers Comp”

Consumer Complaint:

I use what my agent calls a \”dead mans workmans comp policy\” for years. I have a policy that I can never collect on. I pay $1007 a year for that. At the end of the year they audit me. As long as I have not had any employees, I get a refund of about $400. I had no employees, and only worked 3 weeks out of the year the policy was in effect. This year they are billing an additional $911 on that policy. The policy was in effect from 11/1/2007 to 10/31/2008. They are claiming I didn’t sign some sort of exclusion form in time. My policy with them has always been the same. I have workers’ comp insurance that I agree not to collect on. The audit/refund procedure has never been a problem. I don’t understand what they are trying to pull here, but they obviously don’t want to pay out my refund. Your description is exactly the case here. I own a tractor trailer, and I need proof of a work comp policy to get my work. So as you explained, I really just needed to prove to a third party I had insurance. My agent has not been able to resolve this. The insurance company is sending threat letters at this point saying \”legal action will be considered\”. From what I understand from my agent, they are saying I needed to sign an exclusion for myself. \”Although you are specifically excluded from coverage on this policy, there is some premium involved — both as it costs money to issue policies and there is some real risk to the insurance company — as IF you’d hire an employee in the middle of the policy year, that employee would have to be covered. If he was injured, they’d have to pay.\” If this policy specifically excludes myself, why do I need to sign an additional exclusion form? And I did sign that form, but now they are saying I didn’t do that in time. And don’t they base work comp rates on how much money you make? I was done working before Thanksgiving, and if memory serves me correctly it was about the 15th of November. So it’s quite possible it was only two weeks of work. My audit only looked at checks I wrote, not income records. Due to rising fuel prices and falling trucking rates, I only worked 3 weeks at best for the duration of that policy. I guess it’s only my opinion but $1918 for 2-3 weeks of work comp is outrageous. I guess my question is can they require me to sign an additional exclusion form when I have purchased a policy that \”specifically excludes myself\”, to start out with.

Insurance Expert Answer:

In Workers Compensation Insurance terminology a \"Dead Man's Policy\" refers to a Workers Compensation policy when the company taking out the policy has no eligible employees. In many states a principal owner of a business with employees can be excluded from workers comp coverage on the theory that while regular employees must be covered -- and thus give up rights to sue the employer for workplace injuries -- the business owner need not buy insurance on him or herself. However, it is often a requirement that a firm provide proof of workers compensation insurance in order to be eligible for certain government jobs or commercial assignments. For example, let's say that you are an electrician, and have set up a corporation to limit your personal liability. You then are hired to install wiring in a client's office. The building owner may insist that any contractor demonstrate he has workers' compensation and liability insurance in order to do the job. Generally, a dead man's workers comp policy is purchased when you must prove to a third party that you have workers compensation. Although you are specifically excluded from coverage on this policy, there is some premium involved -- both as it costs money to issue policies and there is some real risk to the insurance company -- as IF you'd hire an employee in the middle of the policy year, that employee would have to be covered. If he was injured, they'd have to pay. We suggest you ask your agent to try to get this worked out. Possibly he should have notified you if things changed and you had to do something this year you didn't have to do last year. I can sympathize with you about missing a deadline, but if in fact you should have done something and didn't, and they gave you proper and reasonable notice, there are consequences. If the agent can't help, a polite letter to the insurance company sometimes can help solve the problem. The folks on the 800 line are nice but not very effective. I'd consider writing a polite but firm letter to the CEO of the Insurance Company and showing and sending a copy to the State Insurance Department. In it I'd explain, as you did so well in this email, that you are automatically excluded, that you had no employees, that there is no basis for any increase in premium and that they owe you a refund.