Workers’ Comp Insurance in New York

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Why You Need Workers’ Comp

New York Workers’ Comp Insurance is a no-fault system that provides immediate medical care and disability pay for workers that get sick or injured in the course of their employment. No fault means that the worker need not prove that the employer was to blame or that he or she did not contribute. The employee need only show that the illness or injury came in the course of employment.

The system protects employers because it is the exclusive legal remedy. Employees surrender their right to sue and accept guaranteed health and coverage for lost pay.

Buying Workers’ Compensation in New York

In New York, a resident employer can get workers’ comp coverage four ways. First, they can buy a policy from an authorized insurance company; you can buy directly or through a broker or agent. The second way is to buy insurance through the State Insurance Fund. The fund can carry employers that do not qualify for private insurance. The third is self-insurance; this form applies to large, well-financed companies with solid recent year records and audited financials. A fourth and popular method is group self-insurance. You may be able to access an authorized self-insured group of employers in similar lines of business.

Instructions for Buying

You should prepare for the task of buying workers’ comp coverage by doing a basic assessment and gathering some baseline information. Gather your last policy and last modified experience rating. You should examine your safety program, and if you do not have one, then it should be on your list of things to do.

What You Should Know About Workers’ comp in New York

There is a long list of specific exemptions and inclusions in the NY law. The Board has the power to designate inclusions and exemptions. You should check with Workers’ Compensation Board if you have any questions about coverage. Exemptions include the below-listed employee groups.

  • Unpaid volunteers
  • Employees of foreign governments and Indian Tribes
  • Teachers (that only teach) at charitable or non-profit institutions
  • Ordained ministers, priests, rabbis, and other religious officers

Is Your Business Required to Carry?

Every business with one or more full-time or part-time employees must have workers’ comp coverage unless the business and the employee have exemptions under NY Law. The law exempts independent contractors, commissioned salespersons like real estate brokers.

Where to Buy Insurance?

There are four recognized methods for getting qualified workers’ comp courage in New York.

  • 1

    Private Insurance Providers

    The state of New York government has licensed more than 200 insurance companies to sell workers’ comp coverage in New York. You can buy insurance from private insurance carriers licensed to sell workers’ comp coverage in New York. If you cannot get a quote on the open market, then you can buy through the assigned risk pool at higher than market prices.

  • 2

    Self-Insurance

    The State of New York reviews applicants for self-insurance and approves those that meet its detailed requirements. The S-1 application for self-insurance requires detailed employer information about its finances and its workforce. The process uses a five-year history of audited financials and workforce breakdown by class codes. The review considers the modified experience rating and the loss trail for the preceding five-year period.

    Applicants must have an approved safety program and post a deposit not less than $1,358,000. The security amount can vary and increase from year to year based on experience. The state must also approve any third-party administrator for claims, medical services, or any other part of the program not self-operated.

    Self-insurers may terminate their status at any time and resume purchasing commercial insurance. In such cases, the security must remain until all self-insured claims have cleared the claims and hearing process.

  • 3

    Group Self-insurance

    In 2012, NY enacted sweeping changes in the group self-insurance space. They essentially tightened requirements. Permitted only existing groups to continue, and only if they met the new standards. The revised rules did not permit new groups, and new membership in existing groups must meet financial requirements and the similar business rules. Trade associations and business groups are leading sponsors of self-insured groups providing New York Workers’ Comp Insurance.

  • 4

    Assigned Risk-coverage through The New York State Insurance Fund

    The State Insurance Fund (SIF) is a state agency; it is separate and legally distinct from the New York Workers’ Compensation Board. It is also an insurance carrier that competes with private insurers for business. The policy is to offer insurance at the lowest possible costs, and by this practice, it helps keep all market prices down.

    The SIF charges premiums to employers and collects those funds to support disability payments and medical care for ill and injured workers. The SIF cannot deny coverage to any applicant, and it must also offer the lowest rates possible. It can deny coverage to an employee that has an unpaid bill with the fund until it cures the debt.

How Much Does Workers’ comp Insurance Cost?

The state issues standard rates and classifications from the CIRB. The number of employees, their classifications, and full or part-time status determines the base premiums. Your modified experience rating is a factor in setting your rates. Ratings below 1.0 lower the rates and ratings above 1.0 raise the premium for risks.

What Is the Cost of Not Getting Workers’ Comp Insurance?

New York can impose civil fines, penalties, and criminal violations on firms that fail or refuse to get and keep workers’ compensation coverage. The workers’ compensation law provides that an employer must pay a penalty of $2,000 per ten-day period without compliance. The state can fine the employer I the amount of any compensation and medical costs awarded to an injured employee, and the Board can assess additional penalties.

An employer should consider that the costs of medical care for a mild injury can rise into the hundreds of thousands if it involves surgery or hospitalization. New York offers a public search function online, and any interested party can use it to verify workers’ comp insurance coverage.

Factors that Impact Coverage

  • Legal

    The New York Compensation Insurance Rating Board (CIRB) is a group of insurance carriers including the State Insurance Fund. They gather information to use as a factual basis for setting occupational classifications and basic insurance rates. They revise their data and rate recommendations on an annual basis.

  • Liability

    Employers must get official verification that their subcontractors have covered their employees, and they must confirm the status of workers claiming to be independent contractors. If either result in an uncovered employee, then the prime contractor can be liable.

  • Rates

    New York uses rates and classifications developed by the (CRIB) Compensation Insurance Rating Board. Most New York insurers offer discounts. One important source of discounts is workplace safety programs. If you achieve a low or no level of claims, then you will qualify to get lower rates. If you install an approved safety program, then that activity will also help you get lower rates than employers with no program.

Other Helpful Tips

New York policies cover injuries and claims arising from acts of terrorism. In NY, insurers can list this coverage as a separate item and charge for risks.

Conclusion

Workers’ compensation insurance is an expensive requirement for doing business in New York state. You can barely overstate the importance of New York Workers’ Comp Insurance to NY and out of state employers. Accidents and injuries arising out of employment can ruin an unprepared business and expose its owners to harsh legal consequences and personal liability.

Sources:

  • New York Workers’ Compensation Board
    http://www.wcb.ny.gov/content/main/Employers/Employers.jsp

  • NY State Insurance Fund
    https://ww3.nysif.com/