A reader recently asked - Does a Workers Compensation accident and an auto accident affect the policyholders' premiums in the same manner? The answer is yes and no. Let us look at some of the similarities and differences.

Workers Compensation and auto accidents both increase the premiums paid overall. They both use the Total Incurred (Paid + Reserves) as main determinant of how much premiums will be charged in subsequent policy periods. Both types of claims affect the policyholder's premium for at least three years at the time of renewal.

Even though the company may have installed safety measures, the final effects will take up to four years to be realized. The same can be said for auto accidents. Even if the driver is safe for three years, there is still an extra premium to be paid due to the level of increased risk.

Workers Comp and auto accidents will both carry over to another insurance carrier if you decide to switch. No carrier will ignore your accident record.

One of the main differences in Workers Compensation is that the claims staff is given an extra six months after the policy expires for claims development. The most recent policy period is not affected in Workers Comp. As I have posted many times in the past, Workers Compensation is a delayed system when calculating a premium figure.

There is no audit process in auto insurance. No company or person will ever audit an auto insured such as in Workers Comp. I have never heard of an auto insured having to pay extra premium for a prior year.

This was a rather "quick and dirty" comparison.