What is a Ghost Policy?

Have you heard the term Ghost Policy?

It is typically referred to in regards to workers compensation insurance.  A Ghost Insurance Policy is a term used to describe a specific type of workers’ compensation insurance policy. This type of policy is issued to individual business owners that have no direct coverage value. It can be a great policy for small contractors and subcontractors who have no employees or subcontractors.

Ghost Policy

What is a Ghost Policy?

A Ghost Policy is a minimum earned premium policy. A policy of this nature commonly costs between $750 and $1000 annually. This is depending on the state the policy is issued and several factors related to the industry the business operates.  One major difference from a traditional workers comp policy is that a Ghost Insurance Policy has no payroll calculated into the premium.  It also excludes all owners from the policy.  This is where the term “Ghost”comes from.  Now the premium will vary by carrier and includes the state expense constant, There are minimum premium amounts required to administer a policy.

Why might someone want a Ghost Policy?

While many business owners might think it is a waste of money to purchase this type of a policy, but it may be a preferable alternative to going without coverage for a number of reasons.  A Ghost Policy enables a business owner to have a certificate of insurance issued.  Many contracts require a certificate of insurance in order to secure financing and to do business legally in many states.  In addition, a Ghost Insurance Policy can cost a fraction compared to a policy including the owner. Also, in most cases, a Ghost Policy provides employer liability protection in the event an employee is hired or a payment is made to an uninsured subcontractor. Uninsured Subcontractors are especially important to protect your self and your business from, even if you only interact with subcontractors infrequently. Trusting that a subcontractor is self insured is a good way to get your business in to a situation no business owner wants to be in.

Ghost policies don’t provide coverage, so why would I want one?

The biggest reason small contractor or subcontractors benefits from a Ghost Insurance Policy is to meet state legal requirements or to provide a certificate of insurance to another client or general contractor. Many other businesses, customers, and other contractors require an independent contractor to provide a certificate of insurance in order to enter into a contract with them. The fact that the business does not hire employees is inconsequential to them. They want to have a certificate of insurance in place to make sure they are not held liable for damages or bodily injury that occur within the contract. Many independent contractors do not employ any other people.  These contractors want to prevent high workers compensation premiums just to cover themselves with traditional comp coverage. Unfortunately, in some states these contractors are required to show some proof of insurance coverage. In most instances, a Ghost Policy will help them meet these requirements the most cost effective way.

Workers Compensation Insurance System in Texas

Why is the Workers’ Compensation Insurance System in Texas so different than other states?

Texas Workers Comp Insurance: Find the best answers to your questions about Small Business Workers' Compensation Insurance in Texas at MyInsuranceQuestion.com

Like all 50 states, the Texas Department of Insurance Division of Workers’ Compensation (DWC) regulates the state’s workers’ compensation system.  It also certifies which employers want to self-insure.  That’s right, Texas allows some employers to not carry workers’ compensation insurance.  Now companies who do not provide workers comp coverage may be liable for medical bills and lost wages when an employee is injured on the job. There are certain standards the companies must meet in order to self-insure.

Government contractors are required to provide workers comp coverage for all employees working on a project.  On top of that, most clients require their contractors to have workers’ compensation insurance.  Employers who choose not to have workers’ compensation insurance (Nonsubscribers) must file an annual notice with the Department of Insurance and the employers who choose not to carry coverage must display notices of no-coverage in common working areas as well as give written statement to each new employee hired.

The ability to self-insure (otherwise known as opt-out) is only one part of the workers comp system that is different in the state of Texas.  It definitely adds an additional wrinkle in to the already complex workers compensation system in the state, but there are other parts of the system that have an impact on the business community in Texas.

Texas Workers Comp Market

The market is very competitive for workers compensation coverage and premium rates are well below the national average the national median rates, at around 87% for 2014.  Part of this good rate on premium is due to the strong economy in the state of texas, but also because of the strength of competition in the work comp market that drives down price.

Rates vary considerably between insurance companies and employers are advised to shop their workers comp coverage periodically.  Small business owners can do this by calling multiple carriers themselves or they can shop with an independent agency who can quote from multiple carriers. The ability to quote from many carriers can help your independent agent ensure they find a carrier with the best price for your classification code.

On top of good rates because of strong competition for workers comp Texas offers several exclusions that are unique to the state of Texas.

Coverage Exclusions in Texas

Injuries that are excluded under the Texas Workers Compensation Act:

  1. Intentional or self-inflicted injuries
  2. Result from horseplay or voluntary drug or alcohol intoxication
  3. Inflicted by someone else for personal reasons unrelated to the job
  4. Result from voluntary participation in off-duty recreational, social, or sports events
  5. Result from “acts of God” (like floods or hurricanes), unless the job has a particularly high risk of such injuries.

Communication is key!!!

Communication is key to limiting the workers compensation cost when you have an injured employee.

Communication is key when you have an injured employee.

Unless you have been living under a rock for the past decade or two, you probably realize that healthcare in America is a bit complicated.  Add in an additional bureaucracy in the workers compensation system and the process can become down right frustrating for your injured worker to get the benefits they deserve.  Dealing with this while also dealing with an injury is not exactly what your employee wants to be dealing with while trying to recover from an injury at work.  Communicating with your employee throughout the entire workers compensation process is crucial to getting the worker the benefits the deserve, limiting the cost to your business and to getting the worker back on the job as soon as possible.

Communication should start as soon as the employee informs you there has been an injury.  Who ever is the manager on duty when this occurs should inform the injured employee that the business is on their side and wants to see them get the care and benefits they deserve.  Also the manager should let them know that the process to get your medical care paid for by the workers compensation system is a tad different than going to their local doctor.  It adds a layer of bureaucracy to the situation, but the more likely you are to let them know you are there to help and then follow through with that message, the more likely the injured employee is to trust your business and eventually return to full time employment.

Communicating with not only the injured worker, but with the carrier is crucial as well.  It is also important to keep your agent in the loop, but the carrier is the business that is equipped and responsible for helping you through this process. The main thing they can help you with is directing you to the proper facilities that are equipped to handle the workers compensation process.  Speaking with the carrier about this and relaying the message to the injured employee is crucial to the ultimate success of your business.

Humans are creatures of habit.  When people come to work they tend to create a habit related to that process.  The longer they stay away from work, the more likely they are to develop new habits.  When this occurs and the longer it occurs, the less likely the injured worker is to return to full time employment.  This is when a claim can turn in to an extremely large cost to your insurance carrier and will be a part of your businesses loss cost ratio.  The loss cost ratio is one of a few main factors carriers use to determine whether they are going to offer you coverage and how much to charge your business for premium.  limiting the severity of any claim is crucial to keeping this ratio low.

Work Comp Premium

How Your Workers Compensation Premium Is Calculated


No matter the size of your company, one of the most basic costs of doing business is insuring your employees against injury on the job.  This makes your workers compensation premium one of the most precious fixed costs any business owner can make.

How Workers’ Comp Premiums are calculated:

Workers compensation premium is calculated according to how employees are classified (with regards to the specific type of work they perform) and the rate assigned to each employee classification. The premium rate itself is expressed as dollars and cents per $100 dollars of payroll for each class code. In most states, the NCCI determines the classification rate and experience modification factor (MOD).

National Council on Compensation Insurance (NCCI) Classification Codes are one factor that determines workers compensation premium.

Factors that Go into Setting Workers Compensation Premium:

  • Size of the employer’s payroll
  • Employee job classifications
  • Company’s claims experience

Premiums for work comp insurance are calculated by the formula below…

Payroll (per $100) X Classification Rate X Experience Modifier = Premium

How Your Payroll Affects Your Workers’ Comp Rate

The basis for an employer’s workers’ compensation premium is your payroll. For each $100 dollars of your payroll, there is a specific rate, which is determined by the classification codes of your employees. If you can keep detailed records for what employees are doing on multiple jobs or in different aspects of their job, you may be able to break out that portion of payroll and potentially save on premium.

Another huge thing to keep in mind is sub-contracted labor and 1099 employees. Many business owners make the mistake or think that if they have employees in this manner it does not affect their premium. If you are paying an employee as a 1099 instead of a W2 and they do not have their own work comp coverage then you are responsible for paying premium on those payroll dollars. There is not a week that goes by that I do not field this question or see this situation and I always have to educate business owners on it. The same thing applies to sub contracted labor. If you are not collecting certificates of insurance and verifying, they actually have coverage then you are responsible for the premium as well. Our goal is to help you understand everything possible that could end up costing you money at audit time. We do not want you to have a huge audit balance just as much as you do, so we do our best to let you know everything on the front side of getting a policy in place.

How Your Employer Classification Affects Your Insurance Rate

Businesses are separated into groups according to the type of work they do. The classification system identifies which type of work presents more risk to the employees performing these tasks.

How Your Experience Modification Factor Affects Your Premium

Your experience modifier – typically referred to as your Ex Mod – is a numeric representation of your company’s claim experience. Ex Mods are based on how your business compares to others in your industry with similarly classified employees. An average Ex Mod starts at 1.00. Employers with fewer and less severe accidents than average have a MOD of less than 1.00. This will generally take a few years of consecutive coverage to be effected one way or the other.

Overcoming Difficult Workers Compensation Situations

Often times I speak to business owners that are experiencing difficulties with their work comp coverage.  Either they are being non-renewed and cannot locate an alternate option OR their renewal pricing has skyrocketed to a point they are begging for help to locate a less expensive alternative.  Typically, the difficult situation is related to claims.  Below is a real life situation with a business that I assisted solving their difficult workers’ compensation situation and how the changes they made within their business helped decrease their pricing in future policies.  For purposes of privacy, I am using a false business name, Test Company, Inc.

When Test Company, Inc. contacted my agency, they were up against a non-renewal, no other insurance company options and had employees in multiple states.  Within work comp there is a state program that is required to offer coverage even with bad claims history or a difficult industry to insure.  The state workers’ compensation programs are higher rates and typically do not have a flexible payment plan so cash flow becomes an issue.  Also, instead of having 1 annual workers’ compensation audit for all states with 1 company, Test Company, Inc. was going to need to complete 12 audits, 12 separate policies to monitor and make payment to.  Most state policies only cover that particular state so a separate policy is purchased for multiple states when private insurance companies are not willing to quote.

Test Company, Inc. had grown from 0 to 6MM in gross receipts in 5 years and suffered several very substantial claims.  Their workers’ compensation cost had increased from 200K to nearly 500K due to their claims experience generating a very high experience modification rating and the competitive companies unwilling to quote.  The ownership of the business was so focused on growing, they didn’t think about how claims were going to cause this big of a problem with their workers’ compensation coverage.  Claims were happening over multiple years of coverage and it finally caught up to them so they were forced to identify the problems and fix them.

Together we identified the reasons for the claims and communicated about realistic business practices that needed to be implemented to prevent similar claims from happening in the future.  The employees working in the field have a constant driving exposure and when working at the customer’s home, the Techs are moving heavier items.  There was a driving and lifting exposure that were causing the claims.  First step was to set-up a Motor Vehicle Report (MVR) program to review the driving history of the employees in a vehicle to make sure those employees have a safe driving record.  When setting up a MVR program Test Company, Inc. must establish a set of requirements that are considered “a safe driver”.  Most work comp providers have resources the insured can access to help with establishing guidelines to prevent claims, ask the insurance companies “loss control department” for assistance if your agent doesn’t know.  Secondly, we discussed hiring practices for Techs.  Since these employees have a lifting exposure it’s important to hire employees that are strong enough and haven’t experienced injuries in the past that could lead to a large workers’ compensation claim.  A pre-employment and annual physical for all Tech’s was the solution Test Company, Inc. implemented.

With a business of this size and growing, claims are going to happen.  When there is a claim, what can Test Company, Inc. do to minimize the amount paid?

It’s amazing how stories throughout the process of a work comp claim happen.  One of the best suggestions to prevent an employee’s story from changing is to Immediately document the injury, have the employee sign the injury report form, have a supervisor or key employee drive that employee to the medical clinic and have the supervisor or key employee sit with the doctor’s office when explaining what happened that caused the injury.  Record it with a cell phone if it’s allowed and you think it’s needed.  These steps will prevent a story from changing and an employee’s injury mysteriously becoming more serious than it should have been.

Return to Work Program.  This particular insurance company has a non-profit program where their insureds can set-up a light duty return to work program with a local participating non-profit.  Test Company, Inc. did have a work comp claim where the Return to Work Program worked perfectly.  The Tech employee hurt their back, therefore, could not lift the objects within the homes they would be working on.  This employee was set-up with a local non-profit where the employee sat at a table and folded towels.  2 days of doing this and the employee’s back felt better, he was released by the Doctor, the claim was closed and the employee returned to work.

When making these changes it’s extremely important for Test Company, Inc. to put them within their Employee Handbook, communicate those changes to the employees and have them sign off on a notice form.  This helps set the standards for current employees and future hires.

The pricing decrease doesn’t happen overnight.  The business must implement changes then experience 1,2,3 years of positive claims history proving their changes have led to a safer business to insure.


Florida Small Business Owners need to prepare for Increase in Work Comp

On December 1st, rates on Workers Comp Premium are set to go up 14.5 % throughout the state of Florida. This could have a drastic impact on Florida Small Business   


Approved by the Florida Office of Insurance Regulation (OIR), rates on premium for workers compensation are going to increase by 14.5 % beginning the first of December.  There are the reasons for this dramatic increase and it will have an immense impact of the Florida small business community. There were two court cases ruled on over the Summer and there was a Senate Bill that caused a very small portion of the increase.  The two cases were Castellanos vs. Next Door Company and Westphal vs. City of St. Petersburg.  The additional part of the increase was related to Senate Bill 1402 which dealt with a a new printing of the Florida Workers’ Compensation HCPR Manual.


Castellanos vs. Next Door Company

This court case was ruled on this year and it was between a Florida small business owner named Marvin Castellanos and Next Door Company.  Marvin was an injured employee who sued Next Door Company and the Florida Supreme Court overruled a previous court ruling from 2009. The previous ruling was overturned because it limited the ability of the claimant to get a reasonable amount for attorney’s fees.  Pretty much the previous ruling limited the amount a judge could award for attorneys fees. As a result, most of the money being awarded in workers compensation cases was going to the lawyers to cover their fees instead of going to the inured employees who it was meant for.  With this ruling in place judges merely had to use the previous fee schedule as a recommendation, but depending on the situations surrounding each case the can award more or less for attorney’s fees.  Because of this ruling insurance companies anticipate they will have to pay larger amounts for workers compensation lawsuits in the future. For this reason they asked for and were approved by the Florida Office of Insurance Regulation (OIR) a 10.1 percent on average statewide.

Westphal v. City of St. Petersburg

The next case that had a negative impact on workers’ compensation rates in the state of Florida was Westphal vs. City of St. Petersburg. This case was regarding the 104-week statutory limitation on temporary total disability benefits. This time period was ruled unconstitutional.  In its ruling the court stated the previous time period denied injured workers the ability to obtain proper right of access to the courts. The ruling extended this time period to 260 weeks.  Because injured employees will now be receiving partial salary benefits for an additional 156 weeks insurance companies were taking on additional risk to offer workers comp coverage within the state of Florida.  For this reason the OIR approved an average increase of 2.2 percent statewide.

Senate Bill 1402

The additional 1.8 percent increase on premium for workers’ compensation was related to updates within the Florida Workers’ Compensation HCPR Manual. This increase was approved as part of Senate Bill 1402.


What can business owners do to protect their business? 

Shop your policy

The first thing a Florida small business owner should do when they get sticker shock from their renewal quote is to shop their policy around to different agencies. One thing that can save you a lot of time doing this is to partner with an independent agent who has the ability to shop your policy with many different carriers. A lot of agencies have exclusive relationships with only one or a select few carriers. This dramatically impacts the amount you pay in premium, especially if you are in a difficult to quote class code. A typical independent agent can quote your policy with 10 or more insurance carriers. This gives them the ability to negotiate more effectively for more comprehensive coverage and better rates on premium.

Pay as You Go

Pay as You Go Workers’ Compensation is a flexible payment option that allows business owners to get coverage in place at a much lower price and allows them to pay their premium monthly based on the payroll each month.  This is an excellent option for cash strapped or seasonal businesses.

How Competitive Workers Compensation Rates Develop

Workers compensation rates are developed by claims and premium paid within each industry, per state over a period of multiple years.  In most sections of the U.S., each State sets a minimum and maximum rate for each industry code.  Within the minimum and maximum rates established by the state competitive insurance companies are able to file their rates for each industry depending on how competitive they want to be.  Depending on the characteristics of a particular business, insurance companies could be willing to discount or increase their rates.  Each state also sets a minimum and maximum amount of credit or debit an insurance company can use when quoting.  When researching rates, lower rates indicate an industry that is less likely to suffer a claim and higher rated industry codes indicate a higher risk of a claim.  The lower hazard industries have more options therefore more competition than the higher hazard industries.  More competition typically means those industry types are going to pay considerably less than a higher risk industry with only a few options willing to quote.

Identify the areas that cause the greatest concern for workplace injuries.  Business owners in all industries can increase their chances of paying the lowest workers compensation rates by implementing proper policy and procedures to prevent claims.  Which policy and procedures to implement will not be the same for all industries.  A restaurant would have different exposures that could cause a claim than a remodeling contractor.  When quoting your business, make sure you highlight the areas that your business has implemented that prevents claims.  Brag about the areas that make your business different than other businesses in the same industry.  In my opinion, most business owners and agents are focused on which insurance company has the lowest rate.  Instead, the business owner and agent needs to tell the story of that business and the components of that business that make it attractive to insure.  Just because an insurance company has one of the lowest rates for a particular industry doesn’t mean they are the most competitive option.  Insurance companies that are willing to apply credits/discounts based on business practices to prevent claims will typically be the most competitive options.  If your agent is not asking about your business practices, they are not properly selling to their underwriters to get the best possible pricing.  Below is a short list of ways a business owner can help reduce their workers’ compensation costs.  These are the things that insurance company underwriters want to know about in order to properly price their quote.

  • Business owner is active within the business. When a business owner is active and around employees, typically those employees follow the policies and procedures more carefully.
  • Proper training of how to handle situations that could cause workers comp claims. If you own a convenience store, how should employees handle a robbery?
  • Return to Work Program. History shows that the sooner a business owner can return the injured employee to work the less expensive the claim will be.  Even if you have to create a light-duty position temporarily.
  • Establish a safety program and enforce discipline for not following proper procedures.  This can positively impact your workers compensation rates.
  • Conduct safety meetings. Constantly reinforcing helps prevent injuries.
  • Employee Training for the job they are performing, equipment they are using.
  • Designate Key Employees to be responsible for holding employees to the standards of your business
  • Update your equipment when needed, make sure it has the proper guarding to prevent injuries.

10 terms to help you navigate the Workers Compensation System

Previously we wrote about several common terms related to commercial insurance here.  These were terms that a business owner should familiarize themselves with before renewing any commercial insurance policy. especially before interacting with their states workers compensation system.  Here is a list of terms you might come across related specifically to workers’ compensation insurance. Some of the terms may not have to do with your renewal specifically, but if you use the workers comp system long enough you very well may come across some or all of these terms.  


Aggravation:  Aggravation usually implies a fresh incident producing additional impairment to a previously injured anatomical region. Aggravations are usually not temporary.

Carrier Code:  The ten-character code that identifies a specific insurance carrier. W is always the first character in the code for a carrier of Workers’ Compensation policies. The codes for carriers of Disability Benefits insurance always begins with the letter B. Carrier codes are issued by the Finance Office of the WCB.

Claims administrator:  The term for insurance companies and others that handle your workers’ compensation claim. Most claims administrators work for insurance companies or third party administrators handling claims for employers. Some claims administrators work directly for large employers that handle their own claims. Also called claims examiner or claims adjuster.

Date of Injury (DOI): If the injury was caused by one event (a specific injury), this is the date of the event. If the injury was caused by repeated exposures (a cumulative injury), this is the date that the worker knew of should have known that the injury was caused by work.

First Report of Injury:  Each state has their own form that should be filled out anytime an injury occurs on the job. They should be reported no matter how minor the injury is. Insurance carriers track these forms to look for patterns of injuries and to help employers prevent injuries from becoming more severe or more common. Here is an example of one of these forms from the state of Wisconsin.  

Functional capacity evaluation (FCE):  An FCE is a series of tests administered to a workers’ comp claimant by a physical therapist or other health care professional. They can be beneficial in determining an injured worker’s capabilities and restrictions.

Independent Medical Examination (IME): Am IME is a medical evaluation that is used to resolve questions about your medical condition, including what treatment is necessary and the degree of your permanent impairment, if any. An IME is most often requested by the insurance company when there is a question about what treatment you need or what permanent disability rating you should be given.

Loss Ratio:  The relationship of incurred losses compared to the earned premiums expressed as a percentage. If, for example, a firm pays $100,000 of premium for workers compensation insurance in a given year, and its insurer pays and reserves $50,000 in claims, the firm’s loss ratio is 50 percent ($50,000 incurred losses/$100,000 earned premiums).

National Council on Compensation Insurance (NCCI):  NCCI is a U.S. insurance rating and data collection bureau specializing in workers’ compensation. Operating with a not-for-profit philosophy and owned by its member insurers, NCCI annually collects data covering more than four million workers’ compensation claims and two million policies.

Workers’ Compensation Audit:  A review of the compensation paid during the policy term to determine whether the exposure used to determine the original premium was accurate. If during the policy term, the actual exposure changed from the original estimate of what it would be, then an adjustment to the premium would be made at the time of the audit. If there was more exposure than the estimate indicated, then more premium will be charged. If there was actually less exposure than the estimate, premium will be refunded.


How can I Lower my Workers Compensation Insurance Premium?

Workers compensation insurance premium is often a large portion of overall property and casualty insurance costs. Many business owners look at the workers compensation premium and wonder how they can reduce the overall cost of the insurance policy. The following ideas can help reduce your costs and hopefully help make your business more profitable.

Make sure you are classified properly

Business will have a classification code determined by National Council on Compensation Insurance (NCCI) or some cases the State will have a slightly different number that is used by insurance carriers to rate workers compensation insurance premium. For Example one way to reduce your cost is to take advantage of standard exceptions to the code classification. Employees who perform clerical duties and are physically separate from manufacturing operations may be classified as clerical employees with a much lower rate. Make sure the classification for your employees is appropriate.

Monitor your loss control and safety programs

Loss Control and Safety is critical for preventing losses in the workplace. Set the expectation in your safety manual. Follow up by reminding employees of safe practices including lifting, distracted driving, and the hazard of wet floors. Scheduled safety meetings and incentive programs should be used to promote workplace safety. Decreasing losses will reduce your overall insurance costs.

Develop an effective return-to-work program 

Develop a return to work program. Having injured employees staying at home collecting workers compensation will raise your costs on premiums and also on additional labor you will need to hire while that person is out. A way to get your injured employee to return to work as soon as possible is to create a temporary position for that person. You can give them duties that are not taxing on the body so that they will still be able to recover while they are working.

Speak with your agent about adding a deductible

Evaluate the benefit of adding a deductible to your Workers’ Compensation program. A deductible provides an immediate credit to the workers compensation insurance premium calculation. Additionally, losses under the deductible will not be reported to NCCI and will cause a reduction in your experience modification. Be sure to analyze the cost of funding your deductible.

Notice if there is a pattern to workers compensation claims. Determine if certain areas of your business have fewer claims than others, and determine why the risk is lesser or greater in different areas. Reduce risk by duplicating safe behaviors and programs and eliminating risky behaviors.. Eliminate workplace hazards that have caused an employee to get sick or injured so it doesn’t happen again. Some carriers will even provide help in this area. 

Report claims ASAP

Report Claims as soon as possible! Provide medical attention quickly if an employee is injured, as prompt medical attention may reduce complications that may arise from delayed care. Complications can make workers’ compensation claims more expensive, which may increase insurance premiums.Statistics prove that losses reported 24 hours or more after the loss are more expensive than those reported promptly. Managing your Workers’ Compensation program carefully can save money and improve your bottom line.

These are just a few ideas that can help you in either keeping your premiums low or driving them down. Every business wants to be more profitable and it can be as simple as investing in work place safety that could get you started in the right direction.


Travel exposure and work comp

I have had many conversations recently about employees and travel exposure in regards to workers’ comp insurance. Most employers understand that regular commuting does not result in a work comp claim.  Even if there is an accident involving an employee. However, many carriers view every day or long distance highway travel as a higher risk exposure.

Salespeople, nurses, and other employees who are on the road a lot often are exempt from the coming-and-going rule. Travel is integral to their employment because they don’t work from a fixed office. This also holds true for construction risks.  These businesses have employees that are going from their home state to another state to work. Basically from the time they leave their front door until they return home from that job they have 24/7 work comp exposure. The Walsh Test helps to determine jurisdiction when multiple states are invloved in a workers compensation claim for these employees.

Workers Compensation Coverage for Travelling Nurses.

On-call employees are likely covered from the moment they are called into work even if they get hurt at home. Employees who are injured during business travel may receive compensation, even if the accident happens during recreation. Courts generally are liberal in determining workers’ compensation eligibility in work travel accidents. In many cases, even if the activity that caused the injury is not considered work related.

If an employee is on a trip that is work related and they go to work out at the gym, if they injure themselves at the gym they are covered by workers comp. They are covered because a lawyer  would argue they were only in that gym at that time because they were out of town for a work trip.  For this reason the injury is covered.

With that being said, if an employee goes out for a business dinner and is in an accident after having too much to drink, work comp would most likely deny the claim.  This is because the use of alcohol would exclude the injury whether they were on the clock or not.   So with in certain limits would work comp kick in for traveling employees. It’s worth noting that workers’ compensation coverage for commuting employees varies state to state.

If an employee runs a work-related errand on the way home from work and gets in an accident, her injuries may be compensated. Another example of this would be if an employee is injured running a work-related errand while out for [personal time] lunch. This relates to the dual purpose or capacity concept.

Most of the time I run into having this conversation with a client if it is a higher risk construction company.  A company like carpentry commonly has employees in the home state that are traveling into multiple states annually. Here is the outlook from an underwriting perspective.  Not only is your business in a risky trade like carpentry, but we are throwing in across state lines travel. Where accidents happen in a vehicle with possibly one if not three or four employees could be injured. These are two big reasons insurance carriers are not interested in this type of risk.