Employee Injury Claims
Employees involved in the production process may pose the greatest risk of exposure to harmful substances. Taking safety precaution is very important, but an occupational injury insurance plan is necessary to protect your business from litigation that could arise from employee injury. Workers comp and non-subscriber insurance are two ways to protect yourself.
Non-Subscriber Insurance, in particular, is a great opportunity for Texas businesses to increase operating efficiency and shave 25-40% off their Workers Comp premium.
The article below answers frequently asked questions related to non-subscriber insurance.
When formulating their occupational injury plan, a chemical product manufacturer might contemplate becoming a non-subscriber. Maybe you’ve heard about this, but never really took time to learn the basics. In this article I want to break down the key points…
- What is a non-subscriber? In Texas, unlike many other states, businesses can opt-out of Workers Comp (which is operated by Texas legislation) and purchase a separate policy covering employee injury. In workers comp, the coverage terms and claims administration is established by state regulations, and opting to ‘non-subscribe’ let the business owner choose policy terms established by the insurance carrier.
- What if my vendor/distributor contracts require Workers Comp? Some of our clients do business with project owners or entities that contractually require Workers Comp insurance. If that’s the case, you wouldn’t want opt-out of comp. When the business has a non-subscriber policy, we can’t draft a certificate of insurance showing ‘workers comp’. This isn’t a problem for many chemical producers, since their vendors and distributors do not require this coverage.
- I hear there’s big savings… One of the most attractive things about being a non-subscriber is the savings. Since ins carriers set their own policy terms and conditions (and don’t subscribe to state regulations), they can create a more cost-effective policy. The result is an average 40% savings compared to Workers Comp.
- Any other benefits with being a non-subscriber? Sometimes business owners get frustrated because injured employees take advantage of the workers comp system (medical benefits, temporary disability), which increases the cost of the claim and causes future insurance premiums to escalate. Non-subscriber insurance gives more control to the business owner regarding employee benefits, so it’s more difficult for injured employees to take advantage of those benefits.
- Any drawbacks about opting out of Workers Comp? Rather than getting frustrated with the workers comp system, some employer like the its simplicity and comprehensive coverage…employers know the injured employee will get the medical benefits he/she needs from the comp system. From it’s onset in the early 1900’s, comp was designed to keep employee injury disputes out of the courtroom. By design, the injured employee must seek medical benefits from the WC policy rather than suing the business owner. By opting-out of comp, a non-subscriber opens himself up to lawsuit related to employee injury. Please note, that since it started in the 1980’s, non-subscriber business owners have averaged 1-3 litigated claims for every 1000 employee injuries. For an average size employer, that is 1 litigated claim per 25-40 years.