ALL California employers must provide coverage for their California employees
Agent:
A licensed individual or organization authorized to sell and service insurance policies for an insurance company.
Agreed Medical Examiner (AME)
A physician who may be selected by the parties together, when an injured worker is represented by an attorney, to assess any disputed medical-legal issues.
Binder
A short-term agreement that provides temporary insurance coverage until the policy can be issued or delivered.
Broker
A licensed individual or organization who sells and services insurance polices on your behalf.
Broker-agent
A licensed individual who can act as an agent representing one or more insurers, and also as a broker dealing with one or more insurers representing your interests.
Cancellation
The termination of an in-force insurance contract by either the insured or the insurer before its normal expiration date.
Claim
Notice to an insurance company that a loss has occurred that may be covered under the terms and conditions of the policy.
Claim Adjuster
The person who evaluates the damage caused by a covered loss and determines the amount to be paid under the policy terms.
Commercial Lines
Insurance coverages for businesses, commercial institutions, and professional organizations, as contrasted with personal insurance.
Commission
A portion of the policy premium that is paid to an agent by the insurance company as compensation for the agent’s work.
Conditions
The portion of an insurance contract that sets forth the rights and duties of the insured and the insurer.
Consequential Bodily Injury
In Workers Compensation, special circumstances can arise when a work-related injury causes some sort of non-work related injury. (Please see Loss of Consortium, Dual Capacity, and Third Party Over glossary definitions.)
Coverage
Protection that is provided under an insurance policy.
Declarations (DEC) Page
Usually the first page of an insurance policy that contains the full legal name of the insurance company, the policy number, effective and expiration dates, premium payable, the amount and types of coverage, and the deductibles.
Deductible
The amount of the loss that the insured is responsible to pay before benefits from the insurance policy are payable.
Dual Capacity
In Workers Compensation an employer may be liable two ways to an employee who incurs bodily on the job as a result of using a product or service produced by that employer. The employee is eligible for Workers Compensation benefits and may also sue the employer because of the defectiveness of the injuring product or service.
Earned Premium
The portion of the policy premium paid by an insured that has been allocated to the insurance company’s loss experience, expenses, and profit year to date.
Endorsement
A written agreement that changes the terms of an insurance policy by adding or subtracting coverage.
Effective Date
The starting date of an insurance policy: the date the policy goes into force.
Exclusion
A contractual provision in an insurance policy that denies or restricts coverage for certain perils, persons, property, or locations.
Experience Modification
The adjustment of premium resulting from the use of experience rating. Experience rating plans reflect an insured’s past loss experience (usually from the past three years) and use this experience to modify and determine the premium for the current policy year.
Expiration Date
The termination date of coverage as indicated on an insurance policy.
First Party
The policyholder (insured) in an insurance contract.
Flat Cancellation
Cancellation that takes place on the policy effective date. No premium charge is made; however, other charges (i.e. service) may apply.
Fraud
An intentionally deceptive act committed to obtain an unfair or unlawful advantage. Fraud usually involves monetary gain.
Frequency
The number of times a loss occurs.
Hazard
A circumstance that increases the likelihood or potential severity of a loss.
Indemnity
In a property and casualty contract, the objective is to restore an insured to the same financial position after the loss that the insured had prior to the loss. In the most basic sense, indemnity is compensation for a loss.
Independent Adjuster
A person or organization that provides claim adjusting services to different insurers on a contract basis.
Insurance
A method of shifting risk from a person, business, or organization to an insurance company in exchange for the payment of premium. The insurance company commits to be responsible for covered losses.
Insured
The policyholder(s) entitled to coverage under an insurance policy.
Insurer
The insurance company who issues insurance and agrees to pay for losses and provide covered benefits.
Judgment Rating
A rating modification (either decrease or increase) that is based on the underwriter’s experience, best judgment, and analysis in classifying and underwriting a particular type of risk.
Lapse
In property and casualty insurance, a lapse is the termination of a policy because of a failure to pay premium when due.
Liability Insurance
Coverage for a policyholder’s legal liability resulting from injuries to other persons or damage to their property.
License
A certificate of authority issued by the CDI to an insurer, agent, broker, or broker-agent to transact insurance business.
Limits of Insurance
The maximum amount of benefits the insurance company agrees to pay in the event of a loss.
Frequently Asked Questions about Business Insurance
Why is California Workers Comp Insurance so expensive?
Largely because of claims that occur, experience modifications, fraud and payroll amounts statewide
Where do we get the information we post on our blog site?
The Department of Insurance website, The WCIRB, The Insurance Journal and many other trusted sources
What is an experience modification?
It’s a percentage that compares the payroll and loss history of your company to a similar-sized company within the same industry. For example, if a company has a better than average loss record, their experience modification would be less than 100%. If that is the case you would receive a credit on your Workers Comp rates. If that is not the case however it would result in the opposite, an increase in rates. The experience modification can be closely compared to an individual’s credit score.
Why is Workers Compensation Insurance a necessary requirement?
It is illegal in the state of California to not carry it. There will be penalties, fines and many other consequences if a worker is injured and you do not carry it. Furthermore if there is a claim and you do not have California Workers Compensation Insurance at the time the employer is still liable for all costs relating to the injury which can be devastating to any company.
How does your insurance carrier determine what your experience modification number is?
This is calculated based on your payroll, premium paid and by your reported losses for the last three consecutive years
Who regulates and makes California Workers Compensation laws?
The Department of Insurance regulates the laws and the State Senate makes them
What is a Classification or a class code?
It’s a component used determine the price an employer pays for their workers’ comp insurance premium. Classifications are established for each industry and typically include all jobs or operations within a particular business.