Working in multiple states poses a risk for employees protected under general workers’ compensation insurance products. Many of these products are designed for specific states and sometimes specific industry settings. This leaves many Americans without protection. Fortunately, multi-state workers’ comp insurance offers a solution.
Within the workers’ comp insurance products across state lines, there are differences in requirements and coverage types. Some of the major differences you’ll notice include:
A monopolistic state requires employers to use state funds for workers’ compensation coverage. There is no purchasing through private insurers. This has pros and cons. On the upside, the coverage is regulated. On the downside, there’s no customizing coverage to your client’s needs.
If expanding into a monopolistic state, it’s important to know whether multi-state workers’ compensation policies are valid. Some monopolistic states include Washington, North Dakota, Wyoming, and Ohio.
Workers’ compensation insurance relies on the accurate classification of employee roles and job titles. It directly impacts compliance and premium costs associated with policies.
One issue with class codes is state variation. Every state uses its own rules and codes, even for the same job type. For multi-state workers’ compensation insurance claims, this makes things complicated.
Along with the variance between states, there are other factors impacting class codes, including:
Misclassification risks include legal action, financial repercussions like fines and penalties, and the potential for inadequate coverage.
There is remote work to consider, along with multi-state workers’ compensation insurance for workers at physical worksites. Some potential coverage issues include remote work done for a company in one state while physically residing in another. State law might dictate how workers’ compensation is covered in these instances or leave it up to the insurer or insured.
The best way to ensure your remote employees are fully covered is to work with a knowledgeable insurance writer or wholesaler. Complex insurance products require a unique set of expertise and experience. Working with someone in the know guarantees streamlined coverage and accuracy.
Tracking remote workers is another way to ensure premium accuracy in coverage. Keep tabs on where work is done, how much work is done, and how long workers are in specific states while completing projects.
Subcontractors often work between cities and states. As such, subcontractor insurance is integral and sometimes falls under the category of multi-state workers’ comp insurance. For accidents or errors in subcontracting, proper insurance is required by each subcontractor. Usually, this is the subcontractor’s responsibility rather than the business.
Managing subcontractor compliance is easier with customizable insurance products. Avoid potential liability issues by working with an experienced wholesale insurance provider.
Experience mods differ depending on the state because of unique rating methods and state regulations. Safety and claim records may not show consistency in assessments for multi-state coverage.
Every state uses a rating bureau assessment for mod calculations. Accurate risk assessment requires a keen knowledge of these methods and entities. Document measures, compliance tactics, and state regulations to positively sway mod calculations amidst discrepancies.
Work closely with clients and insurers to track any mod changes and follow up immediately on inaccuracies.
When employees are traveling, identifying potential coverage gaps is key. Check that employees are covered by workers’ compensation in the states they are traveling to, and through. Monitor travel-related incidents as well as incidents occurring on the job.
Compliance with state-specific rules is essential for a streamlined claim process.
Regulatory compliance is a major factor throughout the workers’ comp claim process. Some ways to adhere to regulations include:
Common risks for misclassification include:
Some of the penalties you can expect include:
Steps to take to reduce the risk of misclassification include working with an experienced broker or wholesaler and being aware of state-specific guidelines. Again, compliance is vital.
Working closely with a wholesale insurer simplifies the process for multi-state workers’ comp insurance products. Retail agents working with wholesalers have access to a wide network of professionals within the wholesaler’s network, including niche insurance writers who can customize products for their clients.
Multi-state coverage is a complex area of insurance. A wholesaler finds carriers, curates policies through insurance writers, and facilitates the creation of niche multi-state insurance products for you to bring to your client.
For more information on Novatae and our approach to wholesale multi-state workers’ comp insurance coverage, call us today.
This article is not intended to be exhaustive, nor should any discussion or opinions be construed as legal advice. Readers should contact legal counsel or an insurance professional for appropriate advice.