What is an exclusion form?
NOTE: By signing this Exclusion Form, each officer or member
affirms under the penalties of perjury that the information contained in this
form is true and correct as to that officer or member, to the best of the
officer’s or member’s knowledge, information, and belief.
Are owners and officers excluded from Workers' Comp
Insurance?
Notably, each state’s acts may provide exceptions for
certain owners and officers who are automatically covered to elect exclusion
from the policy. Brokers should also know that owner and officer inclusion and
exclusion rules vary by state.
Are executive officers included in a corporation
insurance policy?
On the other hand, executive officers of a corporation are
automatically included under most acts. Notably, each state’s acts may provide
exceptions for certain owners and officers who are automatically covered to
elect exclusion from the policy. Brokers should also know that owner and
officer inclusion and exclusion rules vary by state.
What if an owner or officer elects to be covered?
If an owner or officer elects to be covered or isn’t
eligible to elect exclusion, ensure their payroll (subject to the applicable
state’s owner office payroll limitations) is included in the estimated payrolls
on the quote; Review newly issued policies to ensure the owner and officer
inclusions and exclusions were handled correctly;
Are owner and officer exclusions affecting broker-client
relationships?
“Issues involving owner and officer exclusions can go
unnoticed until the final audit. When these audit discoveries lead to large
additional premium invoices, broker-client relationships can be negatively
impacted,” said Lemmon.
Why Would Someone Opt Out of Workers’ Compensation
Insurance?
Many officers and business owners make the following
assumptions when opting out of workers’ compensation insurance:
They assume that their medical insurance is enough to cover
them in the event of an injury incurred at the workplace.
They assume that they would never want to file a workers’
compensation claim against their own company, so they don’t see the need to pay
premiums for a policy that they won’t use.
Drawbacks of Opting Out
Even if a corporate officer spends the majority of his or
her time at a desk, there is still a risk of injury. And if an injury occurs,
it’s likely that the officer’s health insurance policy will have an exclusion
for work-related injuries. Without workers’ compensation insurance, the cost of
treatment for those injuries would have to be paid for by the company or come
out of the pocket of the officer.
Opting out of workers’ compensation insurance may save some
money, but it also transfers risk to the employer and to the corporate officer
who chooses to opt out.
Additional Premium Charges If an officer rejects
coverage, he or she will most likely have to file a form with the state and/or
the insurance provider prior to obtaining coverage for the rest of the company.
In absence of this notification, the insurance provider will assume that the
officer is electing coverage, and will charge him or her a premium.
Option to Self-insure
With self-insurance, a company can avoid paying workers’
compensation premiums by serving as its own carrier. The catch is that the
company has to agree to post a bond or put money aside to pay for any claims
that may occur. Each state has its own self-insurance requirements.
Consult the Horton Group today if you have any questions
about self-insurance or need help deciding whether or not opting out of
workers’ compensation insurance is right for you and your business.
Benefits of Workers’ Compensation Insurance The
benefits are the same for everyone covered under a commercial workers’
compensation policy, including officers. Workers’ compensation coverage pays
benefits to workers injured on the job. These benefits include medical care, a
portion of lost wages and permanent disability. It also provides death benefits
to dependents of employees killed from a work-related accident.
A typical health insurance policy specifically excludes
work-related injuries unless there is a rider attached to the policy that adds
business coverage. Furthermore, health insurance does not cover disability the
same way that workers’ compensation insurance does.