Workers Compensation Classifications: Contractors vs. Roofing, Class Code 5465

Posted on September 26, 2013 by Josh Frerking

Workers Compensation Classification to be aware of-Remodeling and Roofing

Workers compensation classification codes can be very tricky to decipher especially for the carpentry and remodeling businesses (Class Code 5465). out there.  There are a few things to keep in mind when examining the classification codes in which your company and employees are placed under for workers compensation insurance coverage. NCCI Classification Codes make a huge difference in your workers compensation premium because they affect the rate you pay per $100 of payroll.  If your employees are listed under the incorrect codes, your business could be underpaying or potentially overpaying for work comp insurance and you may not know until your next audit, if at all.

Interior Carpentry Work is Class Code 5465 for purposes of Workers Compensation Insurance.

Class Code 5465

Residential Carpentry  (1 & 2 family dwellings) is the code we will examine today, Class Code 5465. This is a true “cop-out” code for many operations and a good default code many agents seem to fall back on when there are multiple remodeling operations, but this isn’t always the correct code.

For instance: Per the NCCI Scopes Manual, this Class Code 5465 is intended to apply to contractors or general contractors responsible for the entire construction project. It can apply to all various aspects of the construction of a residential 1 or 2 family dwelling as long as the dwelling does not exceed 3 stories in height.  If a business is working on buildings exceeding 3 stories or commercial buildings, these contractors fall under class code 5403 which is carpentry NOC code (NOC = not otherwise classified).

Roofing, per the NCCI Scopes can also be contemplated in the Class Code 5465 code if the contractor is responsible for the entire construction project. However, if a contractor is just performing the roofing aspect of the project, then 5551 roofing class code would apply as normal.  Keep in mind that the rates for roofing are far higher than the rates for construction.

These two classes of business have become increasingly difficult to quote with regard to workers comp these days due to a number of reasons.  A primary issue many insurers find with Class Code 5465 is that it can be used for anything from a basic handyman who does interior renovations, to light home repairs, to a framing contractor who may be working 2 stories off the ground.  As noted in the scopes description, even some roofing work can be contemplated under this code.

Did you know?

When a contractor provides roofing on “Quonset” type buildings. These are building of the curved metal type. The contractor is assigned code 5535 (typically a siding class code) due to the fact that there is no distinction between the sides and the roof (per NCCI Scopes).

Please note this blog is particularly relating to NCCI basic scopes descriptions. It is important to check with a licensed insurance agent like The Insurance Shop, LLC to have your companies classification codes accurately examined. This can be done to make sure state special applications or other factors don’t apply.

Posted in National Workers Compensation | Tagged , , , , , , , , | Leave a comment

Terrorist Risk Insurance

Posted on September 26, 2013 by Melinda Langworthy

I was 23 when the horrible events of 9/11 happened.  I thought about all of the losses of life and the devastation that the United States endured but never did the insurance effects cross my mind.  It would be 7 years until I enter the insurance world.  Now when I think of events and devastation insurance is usually not far from my mind.

When terrorists attacked New York’s World Trade Center on 9/11/01 it was the largest single insurance loss in history, resulting in an estimated $40.2 billion in insured damages and shaking the insurance industry worldwide. The events of that day have prompted insurers to introduce terrorism insurance as a necessity, assess underwriting risk more accurately with the use of catastrophe (CAT) modeling, enhance efforts in business continuity and document management and to collaborate with the federal government on 14 major pieces of legislation, including the Terrorist Risk Insurance Act of 2002.

Before 9/11 insurance carriers neither charged for nor specifically excluded terrorism coverage.  After 9/11 most states insurance regulators approved terrorism exclusions for insurance carriers.  Congress responded by enacting TRIA in November 2002 to provide a government reinsurance backstop in case of large-scale terrorist attacks, requiring that business insurers offer terrorism coverage for types of insurance included in the act.  Congress extended and amended TRIA in December 2005 and December 2007. TRIA is currently set to expire on December 31, 2014.

The events of 9/11 was absolutely unprecedented in every single respect, producing the largest property losses ever, the largest workers compensation losses ever, the largest aviation losses in history. It sent shockwaves through the global insurance industry around the world. Insurance is a global business and some 200 insurers wound up sharing in the losses associated with the 9/11 attack.

$11 billion (27 percent) in claims for business interruption; * $10 billion (25 percent) in liability claims; * $6 billion (15 percent) in property claims for damage to property, including vehicles, other than World Trade Center buildings One and Two; * $3.5 billion (9 percent) in property claims for WTC buildings One and Two; * $3.5 billion (9 percent) for aviation liability; * $2.7 billion (7 percent) in life insurance claims; * $2 billion (5 percent) for workers compensation claims; * $1 billion (2 percent) in claims for event cancellation and * $500 million (1 percent) in hull claims for the loss of the four commercial aircraft.

While I was looking up information to write this blog I found information from Vice Chairman of Chubb Corporation.  Chubb is a global property-casualty that has provided business and personal insurance for over 120 years.  This information came from National Commission On Terrorist Attack Upon The United States.

Posted in General | Leave a comment

Oklahoma Workers Comp Reform

Posted on September 26, 2013 by Shannon Dye

Oklahoma Workers Compensation Reform

 

The state of Oklahoma has decided to revamp their workers compensation program.

The new program is called the Oklahoma Option and is similar to Texas’s workers compensation opt-out provision. The amount of money that Texas has been saving is one of the reasons that Oklahoma took interest in this new program. The new laws will take effect February 14th, 2014 and only applies to injuries that occur after January 1st, 2014.

Employers in Oklahoma who choose to opt-out will be required to provide a benefit plan that will replace workers compensation coverage. The plan must include all the same benefits that workers compensation coverage offers.

The Oklahoma Option will give employers full control of the medical treatment through their benefits plan. This a big deal because it will cut down on the amount of medical costs that are paid out each year. The employers will be able to ensure that their employees receive appropriate medical care from medical providers who follow widely accepted occupational medicine treatment protocols.

The employer will have 5 days to choose the physician his employee sees if he provides medical treatment within 5 days of notification of the injury. Otherwise, the employee can choose their physician if the employer has not provided one within that window. The idea behind this is to eliminate unnecessary treatment, reduce doctor shopping and help provide shorter periods of disability.

Some key differences between the Texas and Oklahoma Plans are: In Texas, if an employer chooses to opt out of workers compensation and an employee is injured, the employee can pursue legal action through the court system; In Oklahoma, if an employer opts out of workers compensation and the employee is injured, they must pursue their case through the normal workers compensation administrative process.

The Oklahoma Option will be backed by a guaranteed fund that will provide benefit payments in the event that a carrier or self-insured employer become insolvent and are unable to continue to pay for claims.

Oklahoma will also be switching from a court-based system to an administrative system. This change will help reduce employer costs associated with litigation and produce quicker decisions.

The intentions of this new reform is to help reduce high costs associated with workers compensation, provide quicker return to work for injured employees, and promote a better relationship for employers and injured workers. But, it will take a couple of years before we really know if this is a positive long-term change for employers. It will also be take time before we see how well this theory tests out within the court systems once someone is sued for what they feel is poor healthcare provisions.

While I think this can be a positive change, it’s such a radical shift from the norm (Texas is the only other state that doesn’t mandate work comp be in force) that I would be hesitant to jump into the “opt out” pool if I were an employer. Personally, I’d continue to pay for true workers compensation coverage and know that my company is protected by a policy that’s considered a “sole remedy” for workplace injuries.

One claim for an uninsured company could mean make or break for that company. I would not want to risk my lively hood and future over something that could have been easily avoided.

Posted in OK | Tagged , | Leave a comment

Do I Need Insurance as a Business Owner

Posted on September 11, 2013 by Curt Sieve

Do I Need Insurance as a Business Owner? This is a question that has been debated often.  I think the best way to view it is to break it down on an understandable level.  Most Business owners’ biggest asset and achievement is their own company.  All of the blood, sweat, stress, and long hours that you have dedicated to this endeavor can be gone in a flash without insurance. A lot of the time it’s the cost that concerns owners.  I never need it or I don’t need it is how they justify not to carry coverage. Why is it that we will insure our cars, home, and life but not our biggest asset? Below is an example for you to think about related to Workers Compensation Insurance: Small Company has about 5 employees with office related exposures. They don’t have health insurance or workers compensation.  Business owner believes that since he only has office staff what’s the worse thing that can happen….

Employee A goes and gets a glass of water from the dispenser and some water spills onto the floor unnoticed by the employee. Employee B gets up to go send a fax. On their way they slip and fall straight back breaking their arm.  Uh Oh there is no insurance the business owner is going to have to pay for this out of pocket thus taking money from the profitability of the company.  The cost to get Employee B taken care turns out to be around 20K.

Ouch! Now if the same Business Owner had had Workers Compensation Coverage, that cost of coverage would have been around 1K for the year, they could have saved 19K for that claim.  That is real money that makes a huge difference to business owners of any size. Don’t leave your most treasured asset exposed. Consider the long-term benefits of commercial insurance.  It’s not a matter of if it will happen.

Posted in General | Leave a comment

Tennessee Workers Compensation Reform

Posted on August 29, 2013 by Shannon Dye

The state of Tennessee has finally began the process to reform the workers compensation laws which has not happened in decades. The changes will take effective on July 1, 2014.

TN workkers compensation reform

The purpose of these changes are to speed up the claims process and to make the state more attractive to insurers and employers.

Some of the changes that are being made are to the constitutional law, administrative structure and to the courts. They will be creating a new administrative courts system to handle all workers compensation claims. Tennessee is one of only 2 states that currently adjudicate workers compensations claims in the trail courts.

These new changes  will help produce more consistent results and quicker claims payouts for injured workers. Legislation will include enhanced medication, determination of permanent or partial disability benefits, introduction guidelines, a new penalties and new reporting requirements.

Additional Tennessee workers comp changes include:

1. Eliminating the requirement for an injured employee to select a treating physician in writing

2. Specifying that temporary total disability benefits paid to an injured worker before the worker attains maximum medical improvement will not be included in calculating the maximum total benefit

3. Replacing the formula for determining an award of permanent disability

4. Modifying the statute of limitations criteria for filing a workers’ compensation suit

5. Replacing the benefit review conference with a system of alternative dispute resolution.

source: (SHRM.org)

The new changes will help encourage employers to continue to do business in the state of Tennessee and help them to implement better safety practices and return to work programs.

For injured workers, they will see a quicker processing of claims and a quicker turn around time for compensation payout.

Insurance carriers should be more inclined to write business in TN since there will be clearer rules and regulations.  Business owners will have less incentive for the TN Workers Comp Exemption. Currently, there are so many uncertainties and gray areas that many workers comp carriers do not want to write business in the state of Tennessee.

I believe that these changes are going to have a positive impact for the state of Tennessee for a number of reasons:  Carriers will be more inclined to write new business in the state, manual rates will decrease as these new laws take effect, new companies will open their doors creating new jobs and employers will see a fairer, non-biased claims process.

Start a Tennessee workers comp quote and see if you can save money on your coverage.

Posted in State Workers Compensation, TN | Tagged , | Leave a comment

Texas Workers Compensation and Premium Credits

Posted on August 28, 2013 by Justin Bartmess

When a business is too small to qualify for an Experience Modification Rating in Texas and they meet the requirements below, workers compensation carriers apply a “premium incentive” discount for small employers.  Employer looking to purchase workers compensation in Texas need to fully understand the program.

Requirements To Qualify:

–  Premium paid for workers compensation insurance must be less than $5,000/year.

–  1 year of current/prior coverage with 0 lost-time claims = 10% discount

–  2 years of current/prior coverage with 0 lost-time claims = 15% discount

–  2 years of current/prior coverage with 2 or more lost-time injuries in the last year = 10% discount.

The biggest catch to the small premium discount is, IF the business exceeds $5,000 in premium throughout the policy period (determined at audit) the business loses the premium credit resulting in an addition of premium to the audit balance.

For example, $4,999 premium receiving 15% discount = $749.85 discount.  After the audit is complete, if the premium exceeds $5,000 due to increased payroll the small business owner will be required to pay the additional premium (due to increased payroll) and the $749.85 small premium discount.

Texas employers are often not informed of this potential pitfall until they lose their premium incentive credit and receive a big audit bill from the carrier.  In fact, many agents are not even aware of these rules because they don’t specialize in workers comp insurance.  Therefore, its often buyer beware for business owners.

Posted in TX | Tagged , , | Leave a comment

Workers Comp Drug Policies

Posted on August 28, 2013 by Melinda Langworthy

Substance abuse among workers can result in injuries and cost employer’s thousands.  According to surveyed data these injuries have higher medical cost, cause more absenteeism and reduce productivity.  On average Employers pay $7,000 per employee annually to deal with unaddressed substance abuse problems among workers.   Coupled with the possibility of a workers compensation claim, the cost could become significantly higher.

drug free workplaces help reduce the cost of insurance.

In hopes of avoiding these and other troubles many employers require drug and alcohol screens and some require random routine tests. However many people that struggle with substance problems will avoid jobs where testing is required.

Promoting drug-free policies also provide an incentive to current workers to abstain from abusing drugs, because they know their companies value a sober workforce and drug use could put their jobs at risk, experts said.

National studies have shown that there is much higher prevalence of self-reported illicit drug use among workers who are employed by companies that do not test for drugs than among those that do, said Dr. Barry Sample, director of science and technology for the Employer Solutions business of Quest Diagnostics, http://www.questdiagnostics.com/home.html a New Jersey-based drug-testing company.

Drug abuse in the work place is a huge problem for many companies. Here is some information that indicates there is a problem.

American drug users consume Sixty percent of the world’s illegal drugs. Two million Americans use heroin, six million use cocaine, 18 million have alcohol abuse problems and an estimated 23 million people use marijuana at least four times in a week, according to the American Council for Drug Education.

Of all drug users, 74.8 percent are employed and active in the workplace. This means that 12.9 million individuals actively use drugs in the workforce, according to the Occupational Safety & Health Administration (OSHA). Using drugs impairs decision-making abilities as well as physically impairs people. This is a deadly concoction when on the job. In fact, between 10 and 20 percent of American workers who die at work have a positive result when tested for drugs or alcohol. A study by OSHA states that the most dangerous occupations, such as mining and construction, also have the highest rates of drug use by their employees.

Workers who get high on drugs or drink heavily often cannot think clearly, and they may make poor decisions or serious mistakes, according to the Occupational Safety and Health Administration. Their work quality is often inconsistent, and they may have trouble concentrating or focusing. Their productivity may suffer, and they may miss work more often than sober employees. Personal appearance and hygiene may deteriorate, and they often have a lot of health problems.

If you feel that someone in your workplace is abusing illegal substances,  you need to tell a supervisor immediately.  This can either be a manager, a team member, or human resources officer.  You can do this privately or outside of work if it makes you more comfortable.

Never feel that you are risking a coworker’s job.  This is the biggest reason that employees withhold their suspicions, and this is a big mistake.  By not telling someone, you are contributing to the likelihood that an accident will occur.  Reporting your suspicions could also force the addict to seek treatment.

Posted in General, National Workers Compensation | Tagged | Leave a comment

Data Breach Insurance for Businesses

Posted on August 28, 2013 by Shannon Dye

No matter how big or small a company may be, every business should have data breach coverage on their company.

Data Breach Coverage covers your company in the event of loss, theft, accidental release or accidental publishing of personally identifiable information including: Full Name, Social Security Number, Bank Account Number, Email Addresses, Driver’s License Number, Credit/Debit Card Number, Patient/Medical History.

You may be saying to your self, “This can’t or won’t happen to me.” The truth is, data breach can happen at any time and under even the most secure conditions. If you have a presence on the internet, email on your sell phone, credit card machine, use a computer, etc., your data has just as great of a chance to be stolen as any other company or person, no matter the size.

It’s not just the Fortune 500 who need worry either. Out of 760 data breaches analyzed in 2010, two-thirds involved businesses with fewer than 100 employees, according to Verizon Business.  As a result, a number of insurance carriers, including The Hartford, have expanded their portfolios of cyber risk coverage to include data breach coverage designed specifically for small businesses.

Data breaches can have a serious financial strain on a company. If you do not have the proper coverage, you will be paying out of pocket for: legal fees, notices, lawyer bills, potential court fees, and fines.

The costs of a data breach for companies are significant and rising. According to a study by Symantec and Ponemon Institute, the average organizational cost is approximately $214 per compromised record, up from $204 two years ago. While $214 may not seem like a lot of money, multiply it by the number of customers in a businesses date a base. Just a thousand customers whose information has been breached, can hike the average cost to nearly a quarter of a million dollars.

All business owners should contact their business insurance agent and inquiry about Data Breach Coverage. The coverage is affordable and well worth the investment for your companies future. It will provide the piece of mind of knowing that you are protecting:  yourself,  reputation, business and clients. Data breach coverage along with taking extra precautions, can save a lot of headache, stress and money in the end.

So don’t wait a second longer because unless you can read the future, you may be the next target on a cyber criminal’s list!

Posted in General | Tagged , | Leave a comment

California State Fund Insurance for Workers Compensation

Posted on August 28, 2013 by Alex McFarland
The workers compensation market in California has been hit especially hard with the down turn in the economy. So hard, in fact that many standard carriers that were writing a lot of business in California, have stopped writing any new business all together. One market that has held strong and is a very important market for the workers compensation is the CA State Fund.
The California State Insurance Fund is the largest provider of workers compensation insurance in the state of California. They know the market better than any other carrier who writes coverage in the state. Of course, as the state fund, they have to be a strong market. But does that mean that they are going to have the best turn around time?
Until recently, the SCIF used an antiquated software system for inputting customer date to be submitted for a quote. This required uploading documentation from insured to the SCIF for internal underwriting review. This process could take up to 45 days. We all know that this is America. Nobody wants to have to wait for something! We want it and we want it NOW!
Fortunately, they have re-vamped their workers compensation rating system and the turn around time has been significantly reduced.  Estimated premiums in excess of $10,000.00 annually are underwritten in 10 days or less. Premiums less than that is still earmarked for potentially 30 days, however we have seen quotes in as little as 72 hours. What this says to us is that SCIF is making the effort to streamline their turn around time to meet the needs of their clients to improve satisfaction but most importantly to give you the opportunity to provide the coverage for your employees that they deserve.
This new system also has pricing tiers. Depending on your job duties, risk classification, prior policy history or loss history, will depend on what price tier your company qualifies for. This is in addition to the experience modification factor. Each business is different and no two are the same. Each is rated individually and rated accordingly. 
In 2013, for a company to qualify for an experience modification factor, their premium must qualify for the program. This year, the minimum premium requirement is $27,500 worth of premium to qualify. This amount of premium has risen consistently by a little over $2,000.00 in premium annually. If you do not meet the threshold for premium requirement, your business will not get rated for an experience modification factor.
I highly encourage any California business owner to check out the website for the WCIRB. The Workers Compensation Inspection and Rating Bureau for California. There is some excellent information that you may find useful when reviewing your own policy. www.wcirb.com
California State Fund Insurance

The WCIRB runs the California State Fund for Workers Compensation Insurance.

By using a trusted workers compensation Specialist, we can expedite the quote process for you and have a direct line to the underwriter working on your account. We have established relationships with these underwriters and have an expectation of what they require of a submission. We do everything that we can to try and get your information as quickly and efficiently as possible.
Once your policy is quoted and bound, we can issue certificate of insurance for you immediately meeting the demands of your clients or contractors. This level of customer service is not something that you can obtain if you were to contact the carrier and write a workers comp policy directly with them. You would have to submit a request for a certificate and processing that could take days.
As we all know, time is money and the faster that you can get on a job, the faster you can finish the job. That is valuable to both you and your client.  Workers Compensation Shop is a national insurance agency specializing in workers compensation and we provide CA State Fund quotes fast.
Posted in CA, State Workers Compensation | Tagged , , , , | Leave a comment

Homeowners Acting as a General Contractors and Workers Compensation

Posted on August 19, 2013 by Alex McFarland
In today’s housing market, the interest rates are as low as they have ever been. If you are ready and able to build a new home to live in, this could be the time to do it! You are thinking to yourself, ” I have friends that work in all different trades of contracting and could subcontract out all of the work and get quite a bit of equity in the home immediately by doing so.”
You may want to consider the pro’s and con’s of the situation. You have a bid from a General Contractor for the project from start to finish. Their total estimated cost is $ 225,000.00. The actual cost for the labor is only $ 185,000.00. Where does the other $ 40,000.00 go? Is that straight profit for the Construction Company? I think that I could save that $ 60,000 if I just act as my own GC, etc.
The most important though of building you home should be that this is the biggest investment of your life. You do NOT want to cut any corners. Is this something that you could confidently accomplish? If you feel the answer is yes, please keep reading. If not, start searching for the highest recommended GC you can find!
When you are building from the ground up, that means that you will have to deal with county and city inspectors to make sure that all of the proper permits are pulled and that the jobsite is protected. All of the subcontractors need to be lined up and scheduled to be sure that they can come to work, and be as efficient and cost effective as possible.  The same also holds true for major home improvement projects when homeowners higher subcontractors to perform construction related work.
The GC should have their efficiency down to the minute, and the relationships with their subs should be rock solid. This is the piece of mind that you pay for when using a Contractor. But, in addition to that, it is the GC’s responsibility to ensure that the subs that are being used are properly insured.  Most importantly, ensuring that each subcontractor has active workers compensation insurance and has added you or him as an additional insured on their policy.
Building inspectors will drop by job sites and speak to the General Contractor and request proof of insurance coverage from the GC and or subcontractors. If the GC does not have their own policy, than each sub must provide proof that they have their own coverage.
If this information can not be provided, the most drastic action that could be taken is a stop work order issued by the inspector. Meaning, all work stops, until the proper coverage is in place. This is your responsibility as the home owner to ensure that the person you have hired to build your home has the proper credentials.
Of course, if you have never built a home before, you may not know about this. Not having the proper coverage could cost additional time and also thousands of dollars onto the bottom line of the build.
It is always important that you do some research to make sure that your dollars are working for you to their fullest potential. If you are ready, able and capable, by all means do what you do. But if you are not prepared to deal with any situation that arises, just remember, that some things are better left for the professionals.
Posted in General | Tagged , , , | Leave a comment