Workers' Compensation Coverage
Understanding Workers' Compensation Insurance
The New York State Workers' Compensation Law requires insurance carriers to notify the Chair of the Workers' Compensation Board and employers of policy cancellations. Carriers are required to notify the employer by certified mail 10 days prior to the cancellation of an insurance policy for nonpayment. When cancellation is due to any reasons other than nonpayment of premiums, the carrier must provide at least 30 days notice to the employer by certified mail. (WCL §54) Carriers are also required to electronically notify the Chair of the Workers' Compensation Board of such cancellations within the above timeframe's. (WCL §124 )
If an employer currently insured by the State Insurance Fund (SIF) wishes to place coverage elsewhere, they must give 30 days written notice to SIF. (WCL §94)
If an employer receives a notice of cancellation for nonpayment and does not pay the balance within the allotted time, the policy will generally not be reinstated, even if the bill is paid in full at a later date. The employer will be without insurance, subject to penalties from the Board and will, in all probability, be liable for the full payment of any claims that occur during this period of lapse. (WCL §26-a) The employer must get new insurance coverage immediately and may file, if appropriate an application for Board review of any award on the claim or penalties assessed by the WCL Judge for noncompliance (WCL §26-a ) The employer may also apply, if appropriate, for a redetermination review of any penalties it has for noncompliance. (WCL §52 ) If there is a cancellation of coverage, the employer should arrange an audit with the insurance carrier as soon as possible to determine the final bill.
When a policy is cancelled by either party (nonpayment or the employer chooses another carrier) on a date other than the anniversary date of the policy, a short rate penalty is usually charged by the insurance carrier. This penalty, which is a percentage based on the amount of time the policy was in effect for the policy year, is in addition to any premium due. Therefore, the bill for a policy that was in effect for only six months of the policy year would actually be 60% of a full year's premium rather than the 50% amount if the premium was prorated.