Workers Compensation Insurance

Whether you have one or 100 classified employees, workers compensation is required by law in California.

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Quality employees are often the foundation of many great businesses. Offering a solid group benefits package is essential, but have you considered just how essential a comprehensive workers compensation policy is for your business? While group benefits may help attract and retain your employees, workers compensation is there to protect them from the worst case scenario—not to mention a legal obligation.

Workers Compensation 101

Workers compensation is a type of insurance that can protect your company and its employees in the event of an employee injury and/or illness caused by employment. Business owners who do NOT provide workers compensation may face fines of up to $2,500 a day and, in the worst case scenario, a Class D felony charge and/or imprisonment. It is in your company’s best interest to make the purchase before those consequences become a reality.

Workers compensation is designed to offer peace of mind to your employees, by offering coverage for:

  • Death benefits
  • Health and medical expenses
  • Loss of income/wages
  • Rehabilitation expenses
  • And more…

Having workmans comp in place may not only save your business from legal issues and lawsuits, but from internal employee issues, as well.

Choose to Work with Alandale Insurance Agency for Years to Come

Our agency is dedicated to helping business owners throughout the years, from start-up to beyond. We understand that your business will change and grow, and we are here to grow with you.

As an independent insurance agency, we are proud to say that we can not only educate you with one-on-one guidance, but offer competitive workers compensation rates. Learn more about our workers compensation offering by calling 1-800-917-3577 or filling out the free quote form on this page. We look forward to speaking with you!

 

There has been a significant change in California workers’ compensation law that will take effect January 1, 2017 and may alter your workers’ compensation coverage and premiums. 

What is Assembly Bill 2883 (AB 2883)?

AB 2883 was signed into law August 26, 2016 and amends Labor Code sections 3351 and 3352 changing the definition of “employee” and the eligibility criteria to elect exclusion from workers’ compensation coverage. Beginning January 1, 2017 all workers’ compensation insurance policies will be required to cover certain officers and directors of private and quasi-public corporations and working members of partnerships and limited liability companies who may have been previously excluded from coverage. All California workers’ compensation (WC) carriers must comply with this new legislation beginning January 1, 2017 on all in-force policies (regardless of the inception date of the policy).

Below are key details to note:

• A Corporate Officer/Director must own 15% or more of the corporation’s issued and outstanding stock to be eligible to elect exclusion from WC coverage.
•A General Partner of a Partnership, or a Managing-Member of a LLC, is eligible to elect exclusion from the WC policy (Note – the 15% ownership requirement does not apply to General Partners and Managing Members).
•Each eligible Corporate Officer/Corporate Director/General Partner/Managing-Member must sign a new waiver attesting to his/her qualification to be excluded, under penalty of perjury. The new waiver(s) will replace any current Exclusion Letter.
•AB 2883 has eliminated the requirement that 100% of the stock must be held by titled Officers/Directors in order for a Corporate Officer/Director to be eligible for exclusion.

How are insurance companies responding to AB 2883?

Differently, however, many have revised the exclusion endorsements and waiver forms that are required under the new law. Many policyholders will need to take action to bring their policies into compliance. All of these policies will require new endorsements and new waiver forms. We estimate that as many as 10% – 15% of these accounts will see premium increases based on the new eligibility requirements for exclusions. In addition, any policyholders who do not return signed waivers by the deadline will also have a premium increase because their exclusions will be invalidated by the new law.

Compliance Actions

Last week, companies were required to directly mail notices with an information package to all impacted policyholders, which will explain AB 2883 requirements and the actions they must take for compliance.

These packages will contain the following documents:

• A Notice explaining AB 2883 and the information/forms needed from the policyholder.
• A copy of the new Waiver Form
• A copy of the Coverage Questionnaire for Included Individuals Form

Policyholders must follow the Compliance Guides provided in those notices, and return the necessary forms to the company on or before December 31, 2016.
Important items to keep in mind for in-force policies as you review the attached notices and forms:

• All completed/signed documents for each policy should be returned together single package.
• In order for an eligible Officer/Director/General Partner/Managing Member to be excluded, the completed/signed Waiver Forms must be received by December 31, 2016.
• If the completed/signed Waiver Forms are not received by December 31, 2016, companies will be required to include the Corporate Officer/Corporate Director/General Partner/Managing Member on the policy effective January 1, 2017 subject to the Workers’ Compensation Insurance Rating Bureau’s minimum/maximum rules for payroll where applicable.

Should you have any questions concerning this issue, please contact your Alandale representative to help with questions or concerns emanating from AB 2883 compliance efforts. As a reminder compliance will include policy endorsements, and in some cases premium changes. Your insurance company will provide you copies of any new endorsements issued.

Payroll/Premium Implications 

Please note that if any previously excluded individuals lose their eligibility to elect exclusion, insurance companies must include those individuals for coverage effective January 1, 2017 and add their payroll/premium on the policy. Due to the high volume of affected policies, we estimate companies will collect any additional premium owed as a result of these changes either at policy expiration or through increased stipulated billing efforts during the policy year, depending on the policyholder’s anniversary date.

What in-force policies are affected by AB 2883?

AB 2883 directly impacts policies with any of the following exclusion endorsements as these endorsements will no longer be compliant as of January 1, 2017: *1600 Exclusion Endorsement(s) for Corporate Officer(s)/Director(s) *1700 Exclusion Endorsement(s) for General Partner(s) *1901 Exclusion Endorsement(s) for Managing Members.

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