` Workers Comp Cancellation Notice - Why Did We Receive It?
WORKERS' COMPENSATION PREMIUM REFUNDS POSSIBLE
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Jun 13, 2012

Workers Comp Cancellation Notice - Why Did We Receive It?

Cancellation notices by a Workers Comp carrier can be a frightening experience for a business owner, Risk Manager, CFO, HR manager, or whoever internally handles the Workers Compensation claims for an employer.

We received this question earlier this week from a small business owner - I received a certified return receipt letter on 06/05/2012 informing my company is being cancelled for Workers Comp insurance. What do I do now? BTW, this employer became one of our clients due to a policy mistake.

In this case, we recommend:
  1. Finding out the true cancellation date. An insurance carrier has to give your company notice from the date of receipt before the cancellation date - usually 10 or 30 days. The date will be on your notice or on a prior notice. Your policy is usually cancelled at 12:01 AM of the cancellation date.
  2. #1 does not necessarily apply if you are being cancelled for non-payment of undisputed premium
  3. Contacting your agent - we do not recommend this if you are coming up on an imminent cancellation date due to non-payment of premium. You need to talk to the insurance carrier's collection department ASAP.
  4. Searching for any additional documents from the carrier. They will have sent your company other notices. I have never seen a carrier cancel an employer out of the blue. Is there another person in the company that handled the documents? We have seen employers toss such notices thinking they were advertising.
  5. If you are in the cancellation grace period under #1, find out the reason for cancellation. There will usually be a phone number to call.
  6. Contact your agent immediately if the reason for cancellation had nothing to do with premium payment. You will need new coverage. Non-payment of premium accounts for approximately 90% of cancellation notices that we see from companies.
  7. Finding out the results of your last premium audit. If you had a premium audit and bill that went unpaid, what was the reason for the non-payment? This type of cancellation occurs usually early in the next years' policy.
  8. Disputing the bill, except you need a valid and legal reason. If you are disputing a premium bill and are unsure if you really owe it, then you may need to bring in a premium expert.
  9. Paying the bill. You will lose your leverage if you have a valid dispute and pay the premium audit bill. However, if you owe it, pay it.
  10. As a very last resort, contact your Department of Insurance. They usually have an ombudsman that may be able to help you. The ombudsman may actually work for the Industrial Commission or rating bureau depending on your location.
The bottom-line recommendation for cancellation notices is that you must act NOW. Some states are now assessing heavy fines for each day that your company does not have WC coverage. The worst-case scenario is an employee having an on-the-job injury and your company has to pay out-of-pocket along with hefty fines.



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