Workers Compensation Insurance at times can be very easy to obtain, and for some businesses owners can be a nightmare. Some employers are unable to obtain workers compensation in the general market, carrier after carrier will decline for not wanting to offer on a risk. This then forces the business owner to going through the Assigned Risk Plan.
The Assigned Risk Plan through the state is a last resort for business owners. It is intended for employers that have no other alternative. Assigned risk plans are also called the residual market or the guaranteed market. In the state of New Jersey the assigned risk plan is administered by NJCrib. In New Jersey, when applying through the assigned risk system once the application is reviewed the business is then placed with an insurance company. The agent and the business owner have no control over this process.
In the assigned risk policy, business owners face a few difficulties.
- No Payment Plan: The down-payment on a policy can be nearly 40% of the premium up front, from a cash flow perspective this can be very difficult on some businesses. The assigned risk program does not allow for 12 equal monthly installment premiums.
- Less Coverage: In the NJ assigned risk plan, the maximum coverage limit is $500,000 when many business owner prefer to be at least at $1,000,000
- Surcharges: In NJ, business owners are faced with Plan Premium Adjustment Plan, also known as PPAP. PPAP starts at 20% and can go as high as 35%. The PPAP is an surcharge of the policy, with larger businesses this extra cost can be in the tens of thousands, even over $100,000.00.
How do business owners get to this point? Often it is not their fault, they might be a new business with now prior Experience Mod Rating. They could be a business with an unlucky claim history which has resulted in a higher Mod Rating. The business itself could be a riskier occupation. Think of roofers, tree climbers, truck drivers, scaffolding companies, even education centers.
Is there anyway out for these companies? The answer is YES. There are insurance companies outside of the assigned risk program that focus on classes of business that are riskier to place. They also bring a benefit to the company by being focused on loss control policies that are in-force. The insurance company will even send out an individual to review your current safety procedures and make any recommendations that they see that could be a benefit to that particular business.
Our independent agency has aligned our-self with carriers of this focus. It is not an automatic that businesses will be able to obtain coverage through these particular carriers, but it is worth the time and effort to at least try, especially when we have found savings for existing clients of $8,274.00, $45,973.00, $67,493.00 for example.
Shopping insurance is free, saving $45,973.00 a year on your policy, well that speaks for itself.
Tyler Berntsen – Managing Director Gladstone Coverage Group -email@example.com