Most workers know that if they suffer an injury during the course of doing their job, then they may seek workers' compensation benefits. Beyond that, most workers do not know or care very little about the behind-the-scenes work that makes these benefits possible. But if you're a business owner here in New York and are among one of our more frequent readers, then you know exactly how complex workers' compensation insurance can get.
One of the most challenging aspects of workers' compensation insurance concerns premiums, more specifically the premiums a company must pay based on the type of work their employees do. As you may or may not know, premiums can vary drastically between jobs, even at the same company, making it very important for employers to assign and report job-classification codes correctly to an insurance provider.
Now, you may be asking, "Why is it so important to assign and report these codes?" This is a good question and here is the answer:
Job-classification codes are unique to the job workers do. If an insurer sees a large number of claims submitted with a particular code indicated, then an insurer may assume that job is more dangerous than another job with a different code. As you can imagine, a higher-risk job can lead to higher premiums while a lower-risk job may mean lower premiums.
In addition to giving insurers the information they need to properly bill a company for coverage, reporting accurate job-classification codes can also save a business owner from potential litigation later on, like a case out of Massachusetts shows. In this particular case, failing to report the true nature of work has led to serious allegations against a roofing company. The owner is now facing the threat of litigation for workers' compensation fraud.
Whether you understand the full complexity of insurance law or not, you should know that our firm is here to answer your questions. And if a situation escalates, we can provide sound legal advice as well.
Sources: CFO Magazine, "Breaking the Codes: How to Cut Workers’ Comp Premiums," Greg Walker, Sept. 19, 2014
The Insurance Journal, "Massachusetts Business Owner Indicted on Workers’ Comp Fraud Charges," March 4, 2016