Questions to Ask Before Purchasing a Workers Comp Policy

| August 9, 2007

The topic of workers compensation can be a bit overwhelming if you are a new business. Before you buy a policy, there are a few questions you should ask.

Workers compensation is a mandatory coverage and should be carefully shopped around to ensure you have found the right company and broker for your business. Although each insurance company offers state mandated coverage, their underwriting philosophies may differ. Some companies prefer to write certain types of risk while they will exclude others.

Before you send your underwriting information to a broker for submission to an insurance company, you should ask the following questions of your broker/agent:

What is the insurance company’s AM Best or Moody’s rating?

As important as workers compensation coverage is, it only makes sense to have your policy underwritten by a company that is financially stable. A company with a poor AM Best or Moody’s rating may not be around when you need them to pay the longer tailed workers compensation claims.

What type of business is your specialty?

Because some insurance companies prefer certain types of risks, they tend to be better equipped with talented personnel to know how to handle that type of business. For example, the workers compensation exposure of an accountant’s office is much different than that of a pool installer. A company specializing in office risk may not be equipped to handle the intricacies and specialties of a contracting risk like pool installation.

What type of plans do you offer?

Larger businesses may want a more flexible workers compensation policy like a loss sensitive plan or one that offers the ability for the insured to retain some of the risk through a self-insured retention. If you are looking for one of these plans, it’s best to know up front who can provide them.

Will I have a designated person to service my account?

This is an important question. If you need a lot of hand holding, it will better suit you to develop a relationship with one account handler rather than be passed around to the next available representative. Find out how the agency handles their accounts.

List of clients

Knowing that the insurance company and broker/agent currently have clients with similar exposure to yours shows they are familiar with the nuances of your type of risk. If they have never handled an account like yours, you might want to look for a team with more experience in your type of business.

What additional services do you offer?

If your business is plagued with repeated losses of a similar type, you may be in need of loss control services. An insurance company, agent or broker that offers such services will add to the bottom line of your business.

Once you are satisfied with the answer to the above questions, you can proceed with providing the necessary underwriting information to solicit workers compensation coverage quotes.

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Category: Workers Compensation

About the Author ()

Felicia A. Williams is a wife, mother, freelance writer and owner of Tidbits About Money.

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