Attribution: Denise Metz, VP of Personal Lines & Partner at Warren G. Bender Co
by Robert L. Babcock, Warren G. Bender Co., RCAC Premier Sponsor
As a roofing contractor, Workers Compensation is probably your biggest expense. It can impact your monthly cash flow significantly, especially if your policy is on a stipulated billing program. As you may know with Workers Compensation, your insurance company estimates your annual premium and bills you in equal installments with a midterm audit that usually produces an additional bill.
If you have an annual premium less than $150,000, only two carriers will offer you a quote. If your annual premium is more than $200,000, your insurance broker can approach a total of 4 or 5 markets if he is fortunate enough to have appointments with the relevant markets. But there can be a big difference in rates depending on which broker submits your application to one of those markets. Acquiring the necessary information from Safety Compliance and submitting as many details as possible to the underwriter can result in a potentially better final rate for you.
How does your broker use his commission?
The commission paid to brokers is essentially the same, but what is your broker doing with the commission he receives?
• Are you receiving outside claims help for past and present claims exposure?
• Is someone working with the claims adjuster, doctors or attorneys trying to close your claims?
• Is someone trying to get the reserves closed, or at least lowered before the next mod factor is calculated?
All claims and payroll information used to calculate your next mod factor are sent to the WCIRB six months after your renewal date. Therefore, those six months are critical for lowering your mod factor by having claims closed and reserves closed, or at least lowered.
There is much more to receiving and maintaining good rates and premiums than simply looking at your policy renewal. Since Workers Compensation is your largest overhead expense make sure you see all the markets that are available to you, and you are getting your questions answered by your current broker.
Robert Babcock, Warren G. Bender Co., RCAC Premier Sponsor
There are many General Liability policies that have a subcontractors warranty in them. Ultimately, you must make sure that any subcontractor you hire has the same limits on his policy that you have, or limits that are higher. The subcontractor must also have no torch down exclusion, no roofing warranty limitation endorsement and other endorsements.
If your subcontractor has any of these endorsements or limitations, your policy will not pay for any claims that occur in these areas. This is why it is critical for you to understand all the exclusions and limitations that your current General Liability policy has so you are not caught surprised when a claim happens. It is the responsibility of your insurance agent to review and explain all exclusions so you can make a decision as to whether or not you want to purchase the policy he proposes. You do not want to wait until after a claim happens to discover you do not have the proper coverage in place.
Take a look at these two examples:
A Roofing Contractor was working on a large commercial building and decided to sub out the torch down needed. He did not check the limits of the certificate he received nor did he find out if the sub had coverage to do torch down work. He also did not have a subcontractors agreement signed by the sub at the time of the work because it was such a small job. The sub caused a fire that created over $2,000,000 in damages. The sub had no coverage because of the torch down exclusion. The lack of a sub contract agreement gave the roofer no recourse against the sub, and the claim that should have been covered by the sub was then pushed back to the roofer that hired the sub, wiping out all $2,000,000 of the roofer’s General Liability and Excess limits. The Roofer did have a $1,000,000 Excess Policy but it was not enough to cover all the damage.
You must protect your business by having a subcontractors agreement on your letterhead. Make sure all subs sign this agreement before they walk onto your job. You should always get a certificate from the subs listing your company as an additional insured for protection against any claim they might cause. You should also get clarification that their policy allows your sub to do the work they are being asked to perform.
A Roofing Contractor hired another Roofer to work on a very large private home in Southern California. The Roofer received a copy of the sub’s certificate naming him as an additional insured but did not look closely at the certificate. The certificate read commercial work only, not residential. The sub caused $125,000 in damage to this home that was not covered under his insurance and the Roofer who hired him had to turn the claim into his own insurance carrier for coverage.
It is the simple things that can get you in trouble. Make sure you have the correct coverage in place before a claim happens! Make sure all your subcontractors sign a subcontractors agreement and provide you with a copy of their certificate naming you as additional insured before they step onto your jobsite. If they are going to do some specific work like torch down, make sure their policy will cover that work.
If you have any questions about this or other matters, do not hesitate to call Robert Babcock, Warren G. Bender Co., (916) 380-5347.
Bob Babcock, Warren G. Bender Co., RCAC Premier Sponsor
When you have a workers’ compensation claim that you feel is fraudulent, you must tell your workers’ compensation insurance company to investigate it. This will give them a 90 day window to investigate the claim before they pay out any money.
However, after the investigation it is very important that you calendar to call back your claims adjuster every three (3) months to see if the claim has been closed. It could take as long as two years to close a claim, and if you are not on top of your claims adjuster, that claim could slip through the cracks and be paid without you being notified.
If the insurance company believes it would be cheaper to get the claim off their books, they have no obligation to contact you if they want to negotiate with the claimant to close the claim. As long as a claim is open, there is a chance that it could be paid and go against your claims history and affect your mod factor.
So, if you see a claim open on your loss runs, keep in contact with your claims adjuster until it is closed. If you don’t, this could cause your mod factor to increase, and you will learn about that after it happens.
There are many changes to the workers’ compensation rules that have been happening and will continue to happen of which you need to be aware, and many of these changes impact your bottom line. If you are not getting phone calls, personal visits or letters from you current agent keeping you aware of these changes, please give us a call at Warren G. Bender for help at (916) 380-5347.
There has been and still is confusion regarding the new rule that went into effect January 2017 on the reporting of medical only claims. I was involved in a webinar sponsored by the Independent Insurance Agents and Brokers of California last week, and took some notes so that I could clarify some of the misunderstandings regarding the new law on First Aid Claim Reporting. Here are some of the highlights:
Employers cannot determine what a First Aid claim is anymore; only a doctor can make that determination;
Doctors must report and file any and all claims when treating an injured employee;
The WCIRB cannot provide any counsel concerning what is and is not a First Aid claim;
Medical costs incurred of any kind, no matter who pays the bill, must be reported to the employer’s workers’ compensation insurance company, and in turn it will be reported to the WCIRB, which will affect the employer’s experience modification factor.
If the employer gives to his employee a bandage and sterile wipes to cover a scrape or cut, requiring no other attention, it need not be reported since there was no cost involved. Employers must be careful to use this process sparingly so they do not get into trouble.
There will be an endorsement presented to the state this year asking that the first $250 in medical costs not be reported to the WCIRB in order to help keep experience modification factors down.
If your current agent is not explaining these types of changes to you so you are being kept up to date, please consider giving Warren G. Bender Co., your RCAC endorsed broker, a chance to review your insurance coverage. We might be able to make a difference in your coverage and pricing, and will certainly keep you up to date on changes in the industry that affect your bottom-line.