Most
insurance people think it's just
plain crazy. We don't, but you
should know that not buying a Workers Comp
policy isn’t
just trading one kind of policy for another...
You are actually changing the legal
standing of your business and your
employees. Not being a part of Workers Comp
gives your employee
a
right to sue that they didn't have under
"real" Workers Comp and it means you are giving
up
your Common
Law defenses (e.g. Assumption of Risk, Fellow
Servants Fault and Contributory Negligence)
if sued by an injured worker. -You
go to court with one hand tied behind your
back! This
report answers the question "Why do most
Restaurant owners leave the system? Are
they NUTS?"
You've got to read my other free report on this
subject 6 Gaping Work
Injury Insurance Holes that could Gut Your Business because the answer is a little twisted.
YES, IF they don't
do it right they could easily
be kissing their business goodbye!
I'm
going to get to the "nuts" question
but, as in the other report a little introduction
to this complicated subject is required. Texas
insurance is just plain different. No other state
allows a business to drop out of the Workers Comp
system but here, most restaurants do.
The last state survey estimated 52% of the
Food service
and Hospitality industries drop Comp. I’ve
heard estimates inside the restaurant industry closer to 2/3! Since employee
injuries are the #1 most common insurable loss
in a restaurant it's
an issue you've got to address effectively.
In Texas, by law you must decide what you are going
to do about workplace injuries. As mentioned each
option has a number of legal ramifications for
both you and your employees. You can:
1)
|
Buy "real" Workers
Compensation and
be a part of the "system" where
your employees receive the benefits that
are prescribed by the State. "Exclusive
Remedy" doctrine really limits your
employee's ability to sue because
by working for you they are agreeing that
Comp benefits are almost their only recourse
(but the premium isn'’t cheap).
|
2)
|
Formally
reject the protection of the
Workers Comp Act by filing as a "non-subscriber" –then
most business owners buy another
kind of insurance. People call
it different things, an "alternate" to
workers comp or "occupational accident"
insurance. Those policies are not standardized
like "real" Workers
Comp. They vary drastically in
price and coverage from one company to the
next and they usually involve compliance
with other federal and legal programs
like ERISA (Federal laws governing employee
benefits) and binding arbitration. (Warning – most
agents don’t like this coverage
so they don’t do it very well but
most restaurants do like this approach!).
Frankly, there are some really lousy
policies out there. There are also some
good ones and it really pays to get
the right one!
|
3) |
Not
Decide. It's like tap dancing
on a land mine – a legal combination
of the absolute worst of the 2 options above. If
your employees can show that you didn't
follow the legally required process to notify
them about not being a part of the Workers
Comp system, you could owe them generous
Workers Comp benefits without having a policy
to pay for it (does unlimited medical
bills and
years of lost income sound expensive?). Lots
of restaurants don't file the
forms and don't buy any insurance.
There really are inexpensive options. By
the way, the risk & possible fines are why
offer a FREE
Filing Reminder Service. Annually, you will receive the updated forms
and notices by
email with instructions. It is a service
for friends and customers of the InsuranceChef.com
program.
|
So
if "bailing out" of the
Workers Comp system is so risky,
Why do so many people do it??
|
Sizzling
Reason #1: Cost
|
A
good "alternate" policy is cheap! The
2009 "Benchmark"
rate for "real" Workers Comp
is 3.44% of payroll. Now, you'd get
some discounts for premium size and good
experience and there are some dividend
plans that will give some of your money
back if you "keep your nose clean",
but starting out... do the math! That's
expensive, particularly when we see rates
in the neighborhood of 1% for an "alternate"
with a million dollar limit! We often see
proposals
at HALF or A THIRD the cost of
"real" Workers
Comp! That much savings is hard to ignore
when food costs are up, competition is
up and margins are getting skinny. Call
us or go online now for a FREE no-obligaton
quote.
|
Sizzling
Reason #2: Control of False Claims
|
How many
times have you heard this story?
The employee gets drunk and falls off his
own
tailgate on Sunday night, so he limps in
the door and "toughs it out" long
enough to fake a Workers Comp injury when
"no one was watching" on Monday
morning. Bingo, the benefit bell just rang
at your
expense! He probably doesn't even
report the injury till a few days later
when you ask him why a nurse called looking
for your policy number. Workers Comp is
a kind of "no-fault" system.
In Comp the insurance company will tell
you they have to be able to prove the "incident" didn't happen – tough
(and expensive) to prove so 90% of the
time, even the best
"real" Workers
Comp carriers will pay the bills and ultimately,
you pay even more in premium! "Non-subscribers"
often control this with additional
employee reporting
requirements and if the "incident” sounds
really suspicious or if they can collect
the "Sunday night story" from
other employees – they deny the claim! – Easier
to do in a less regulated environment and
cheaper in the long run for the Owner!
|
Sizzling
Reason #3: Control of Physician Selection
|
Now
I like some Chiropractors. I've
seen them do some amazing things for
a back injury
that would have had an MD sharpening his
carving knife and firing up the lights
in the operating room. It can be a lot
less invasive. --But there are those other
guys... you've seen them advertise
during those "Judge" shows
on daytime TV. It is Insurance Fraud like
#2 above, but they do it. It's amazing
how much "worse" the
injury gets after the first 20-minute "consultation"
with a ChiroQuacktor. I guess they're
no good at real medicine so they make their
money stretching out Workers Comp injuries
at 3 "treatments" a week ...forever
...and ever. Workers Comp has gotten better
at this in the last few years with the
legislature approving Preferred Provider
Organizations, but non-subcribers
can create their own Physician network
if they want. –Amazing
that there don't seem to be any ChiroQuacktors
on the list!
|
Sizzling
Reason #4: Control of Coverage
|
"Real"
Workers Comp usually provides better benefits
to
the injured employee, so why would I say
Coverage is a reason to buy an "alternate"?
Many businesses feel that the benefits
in Workers Comp have run wild! Remember
that "no-fault" type
system? The employee doesn't have
to prove that the employer did anything
wrong in
order to be paid – the injury just
has to happen on the job. If the Owner
didn'’t do anything wrong to cause the
injury, is it "reasonable" to
pay an unlimited amount of medical bills and
years of wage replacement? I mean really,
if lightning struck a customer in the parking
lot, would you owe him?
Well, that's
the logic. Many businesses feel a moral
obligation to provide a reasonable
benefit to
care for their employee but also believe
a huge claim should only be paid if he
did something wrong. Let the employee sue
if he thinks he can prove negligence! Afterall,
that's how it works with customers
or other forms of public liability. I have
also known of businesses who used the cost
savings of more reasonable work injury
benefits to do other things like Health
Insurance or Profit Sharing. This subject
should be considered in the context of
overall compensation and benefits.
|
Sizzling
Reason #5: Burden of Proof against Hurdles
|
This
is another of those issues that relate
to the legal
differences of being in or out of the system.
The way Workers Comp is set up there is
a lot less legal risk in Comp. Prior to
the 1992 Texas reforms, there used to be
a lot of attorney involvement to decide
the amount of payments owed. Afterward,
that reduced drastically. The real lawsuits
(actual tort litigation) that have been
successful have been limited to just a
handfull since 1913 – but the benefit
cost of paying claims is huge! On the other
hand, with an "alternate"
policy the liability increases (remember
the 1st paragraph of this report) but
the benefit costs decrease. That's
why it's
a lot cheaper! In an "alternate"
plan the employee has the burden of proving
1) an injury 2) employer negligence and
3) that the negligence was a proximate
cause of the injury. In short, he's
got to have a case to win. – The
case is easier to prove if he can get it
to court (again, paragraph 1) but
getting it there is no "cake walk".
I
know, you are thinking "plaintiff
attorneys are a dime a dozen",
but there are additional hurtles they
have to jump. The next is binding arbitration.
Most plans have you make arbitration
a condition of employment. The employees
agree (in writing and by accepting a
check) that they will go to independent
binding arbitration rather than court.
Most Owners and their insurance companies
feel this takes a lot of "topside"
out of the risk. Then, there is the gift
of our legislature – Tort Reform!
That reduces topside Risk even if there
is Gross Negligence by the Owner. All
this is strikingly different than "real"
Workers Comp where practically the only
knowledge
an agent needs is the price and pay plan.
It can really pay to use an agent that
really knows this stuff.
|
Sizzling
Reason #6: Self-Insurance Flexability
|
A
workers comp "alternate" isn’t
just for small restaurants, in fact large
employers usually value the control and
deregulation aspects much more than smaller
operations. True Workers Comp
Self Insurance doesn't happen often
in Texas because the requirements (filings,
financials,
reserves, etc.) are almost as bad as being
an insurance company. Large deductible
plans aren't as bad and are far more
common, but the Carrier has the legal obligation
to pay the claims so you usually have to
put up a lot of money as a claim reserve
and have very little influence over claims
handling and reserve setting. As a "non-subscriber"
you can buy 10, 20, 25 Million in coverage
and choose very large "retentions" (like
a deductible) and hire an administrator
to process your own claims. –Very
little government red tape or controls.
We've helped clients with hundreds
of locations and thousands of employees
do these arrangements. Call or email us
to do a feasibility Study. We can analyze
your claims, suggest retentions and pull
the insurance, legal and claim service
team together for an effective overall
strategy.
|
Sizzling
Reason #7: Compassionate Involvement
|
More
control can mean more direct involvement.
Under
an "alternate" plan many medium
and larger businesses pay lost wages directly,
even if they are being reimbursed by the
insurance company. They are personally
involved in recovery follow-up and return
to work programs. With an "alternate"
program they can be personally involved and
the employee knows they care. The
claim costs go down, the employees return
to
work faster,
and employee moral in the company goes
up. It’s a real win-win situation
if the employer is staffed to do it.
|
Running
your business is more than a full time job. You
don't have the time to keep up with every
new law or trend in the insurance industry. Workers
comp "alternatives" are changing almost
as fast as the Texas weather. Be a smart consumer.
Protection for you and your business requires constant
vigilance....and a partnership between you and
a professional agent that knows your business.
For the latest information on how to save money
AND get the best protection for yourself and the
people you care most about contact
us.
Sincerely,
Kent
Hagood,
CIC,
CRM
Certified
Insurance
Counselor,
Certified
and
Licensed
Risk
Licensed
Restaurant
Insurance
Specialist,
"Executive
Chef"
of
InsuranceChef.com
PS:
Let's
be
perfectly
clear
what
you're
getting
here. No-nonsense
advice
on
Texas
restaurateur's
biggest
insurance
question
-then
the best
pricing
and
specialized
service
and
protection
you
can
buy...
period.
Awfully
brash
to
say
but
no
one
does
this
better,
honest.
We'll
give
you
a
"no-nonsense"
evaluation
of
"real"
or
"alternate"
workers
comp.
Then,
we'll
give
you
a
free
no-obligation
quote
on
either
or
both. It
just
takes
5
minutes
of
your
time.
PPS: I
can
usually
have
your
free
no-obligation
quote
faxed
or
emailed
in
just
72
hours
or
less.
Call
us
or
use
the
Easy
Fax
Back
Quote
Request
form
at
the
end
of
this
report.
PPPS: Check
another
of
our
FREE
reports.
Just
click
on
a
menu
button
to
the
right
and
print
to
read
later.
You
won't
get
this
kind
of
plain-spoken,
candid
advice
anywhere
else.
PPPPS: All
of
our
customers
receive
our
exclusive
Money
Back
Guarantee!
© 2008-2009
Risk
Strategies,
Inc.
The
reader
is
encouraged
to
consult
their
insurance
directly
concerning
any
related
issue
and
the
reader
assumes
all
responsibility
for
their
own
actions
relative
to
any
items discussed
in
this
report.
Adherence
to
all
applicable
laws
and
regulations
(federal,
state
and
local)
governing
the
use
of
any
product
or
service
described
in
this
report
is
the
sole
responsibility
of the
reader.
The
author
assumes
no
responsibility
or
liability.
|
