Tag: Insurance Policy

Does Workers’ Compensation Coverage Follow Employees Working Out-of-State?

Does workers’ compensation insurance coverage automatically follow employees when they travel or work out of state? Nope. Workers’ compensation laws are state-specific. So are workers’ compensation insurance policies. An employee injured while working out of state will not have workers’ compensation coverage unless that state is identified in Items 3.A or 3.C. of the policy’s Information Page.

Item 3.A is used to identify the state or states in which the employer is operating on the policy’s inception or renewal date. Item 3.C. identifies other states in which the employer plans or expects to be working, but the work will not begin until after the policy’s inception or renewal date.

How do you know which states should be listed in Item 3.A? This can be simple for employers operating entirely and exclusively in one state. It can be tricky for employers with operations in or connections to multiple states. There aren’t any fixed rules, but various factors can be considered to help determine which states need to be listed in Item 3.A. For example, Item 3.A states may include:

  • The state of incorporation;
  • The state of domicile (principal place of business or home office);
  • States with branch offices, regional operations or subcontractors;
  • States in which employees have significant contact (often involves employers located near state borders);
  • States in which employees regularly work or temporarily work more than a specific number of days during the policy year;
  • States with no or limited workers’ compensation reciprocity;
  • States in which employees are contracted for hire; and
  • States in which employers have multiple employees

In addition to identifying states in which an employer plans to work in the future, Item 3.C. should include bordering states in which employees may reside and states employees may occasionally visit or travel through. Remember, when work actually begins in a 3.C. state, employers must notify the insurance company at once.

Properly identifying states that need to be listed in your workers’ compensation insurance policy is critical. The consequences for failing to list a state under either Item 3.A. or Item 3.C. can be severe for employers and employees alike.

Please contact us if you have any questions about out-of-state workers’ compensation insurance coverage. You can subscribe to our newsletter to receive regular insurance and risk management informational updates.

Does Homeowners’ Insurance Cover Damage Caused by a Meteorite?

Nearly 95 percent of homeowners have some form of homeowners’ insurance. Most have a basic understanding about their insurance policies. But, a survey by the Insurance Information Institute revealed that many homeowners have significant knowledge gaps about what is and what is not covered by a standard homeowner’s insurance policy. As you might imagine, these gaps can be very costly.

The good news is that according to the survey, a majority of homeowners correctly identified perils that are covered by a standard homeowner’s insurance policy.

  • Fire (91%)
  • Theft (79%)
  • Hail (73%)
  • Burst Pipes (71%)

The not so good news is that many homeowners think other perils are covered even though they aren’t. For example,

  • 43% think damage caused by flooding from heavy rain is covered.
  • 28% think hurricane storm surge flood damage is covered.

Standard homeowners’ insurance does not cover damage caused by flooding from heavy rain or a hurricane-driven storm surge. A separate flood insurance policy is needed to cover this kind of damage. Though flood insurance is available through the National Flood Insurance Program and from some private insurers, the Insurance Information Institute found that only 12% of homeowners carry flood insurance.

Another common misperception involves “earth movement” coverage. According to the survey, many homeowners incorrectly believe the following perils are covered by standard homeowners’ insurance:

  • Sinkhole (31%)
  • Mudslide (24%)
  • Landslide (23%)

Supplementary insurance is often needed to cover these perils. Mudslide damage can be covered by a flood insurance policy, but landslides, sinkholes and earthquakes typically require separate, specialized policies.

The survey also found that many homeowners were not aware of various coverages that are included in a standard policy.

  • 43% didn’t know that theft of possessions from their car may be covered.
  • 54% didn’t know that theft of a camera while vacationing may be covered.
  • 70% didn’t know that theft of a child’s laptop while at school may be covered.
  • 56% didn’t know that damage caused by airplane debris may be covered.
  • 73% didn’t know that damage caused by a meteorite may be covered.

Given the complexities of homeowners’ insurance and the wide range of risks associated with owning a home, homeowners are encouraged to speak with a reputable and experienced insurance agent. Knowledge is the key to protecting your most valuable asset.

Please contact us to learn more about obtaining adequate homeowners’ insurance coverage.

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Insurance Applications: Small Lies Can Create Big Problems

Is it wrong to lie on an insurance application? Many believe that it’s no big deal, like lying to the IRS. In reality, it can have serious consequences, like lying to the IRS. If an insurance application contains false or incorrect information, a claim that may have otherwise been covered may end up being denied. To keep this from happening, it is important to understand what is required when completing insurance applications.

When it comes to completing applications, whether it’s for business, homeowners, auto or another kind of insurance, not all lies are created equal. A majority of states have statutes that strictly limit an insurance company’s ability to deny coverage because an application contains false information. These statutes aren’t intended to protect those who lie on their applications, but to prevent insurance companies from relying on insignificant misstatements to deny coverage.

Under these statutes, insurance companies are typically allowed to deny coverage only if the misrepresentation, omission, concealment of fact or incorrect statement is significant enough to warrant such a harsh result. In other words, only material misstatements, omissions, etc. justify a denial of coverage.

False or undisclosed information submitted in an application is generally considered material if the insurer would have altered the terms of the policy had the true facts been known, or if the true facts would have served as a basis for denying the policy application. In Florida, for example, an insurance company can deny coverage under a policy only if:

  • the misrepresentation, omission, concealment, or statement is fraudulent or is material either to the acceptance of the risk or to the hazard assumed by the insurer; or
  • if the true facts had been known to the insurer pursuant to a policy requirement or other requirement, the insurer in good faith 1) would not have issued the policy or contract; 2) would not have issued it at the same premium rate; 3) would not have issued a policy or contract in as large an amount; or 4) would not have provided coverage with respect to the hazard resulting in the loss.

In some states, insurance companies don’t need to establish that a false statement was made knowingly or intentionally. Even innocent mistakes can be used to deny coverage if they are material. In other states, like Massachusetts and Tennessee, an insurance company cannot avoid coverage unless a misrepresentation increases the risk of loss or is made with the actual intent to deceive.

Depending on the applicable law, if an insurance company is able to establish the materiality of a misstatement or that it was made with the actual intent to deceive, it may be able to deny a claim or void the entire policy. In the event of a claim, insurance applications are often reviewed to determine whether there are any material misstatements that can be used to deny coverage. This should be incentive enough to complete applications truthfully and accurately.

Please contact us if you have questions or concerns about completing an application for insurance.

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