Risk & Business

Image via Wikipedia Delaware Insurance Commissioner Matt Denn today announced another cut for workers compensation rates to be effective October 1st. This rate cut is an average 11.57 % decrease in premiums, covering the wide range of occupations covered under the code. When combined with the rate cuts previously undertaken last fall, the State of Delaware insurance website, www.delawareinsurance.gov, is touting the almost 30% decrease in workers compensation rates since last year. While work still remains to be done on the cost containment/managed care portion of recent workers compensation legislation, this is a good sign for employers that the days of runaway workers compensation costs/premiums might indeed be a thing of the past.

When a new contracting business is established they shop around for insurance and usually end up acquiring the policy that provides the best price and/or coverage. The problem starts when it comes time for the policies to renew. Many are unaware that these policies, namely the general liability and workers compensation policies, are auditable policies. When first written, general liaibility policies are based upon either sales or payroll for the policy year and workers compensation is based exclusively upon payroll. Things go wrong though when the contractor uses subcontractors for various jobs and fails to collect a certificate of insurance from the contractor showing proof of their own, the subcontractor's, general liability and/or workers compensation coverage. At audit time, usually a few weeks before the policies are due to expire, the auditor asks for these certificates of insurance. If they aren't provided then the insurance company will use the payroll paid to th