When do you to fill out an ACORD 130 Workers Compensation Application? The ACORD 130 form is a standardized insurance application that asks specific questions about an insured's business so the insurance company can rate the workers comp policy properly.
ACORD 130 Workers Compensation Application
Workers comp is helpful for employees that receive an injury while working. Workplaces have significant hazards, such as machinery and heavy inventory.
These types of hazards increase risks for employees. Proper workers compensation coverage can help to protect both the worker and the company.
Most states require this coverage according to the law.
Business owners must be sure to secure proper coverage and that starts with the ACORD 130 Workers Compensation Application.
The Workers Compensation Application provides for worker' comp, employer's liability, and voluntary compensation coverages. Workers compensation should be sufficient to cover employee injuries in a business. There are state programs for most companies. Federal employees are covered under the federal policy. This type of policy covers injuries, loss of income, and even reduced wages in the case of permanent damage. Extreme situations that result in death of an employ also fit into a workers compensation policy.
The Rating Information section has been designed to follow workers' compensation rules published by the National Council on Compensation Insurance (NCCI). Following are some instruction for this section:
- Information in the Rating section must be entered by state and location. If there are multiple named insureds, information must be shown by individual entity.
- State abbreviation for the associated location.
- Location Number - for each entry corresponding to the locations listed in the Locations section above.
- Class Code - The workers compensation class codes which best describes the applicant's business. Remember that it is the business of the employer, not the individual employees, that is being classified. Consult the proper rating manual to determine the code. Rating bureaus may exercise control over classification assignment.
- Description Code - Use this column to include any applicable company description code for this type of risk.
- Categories, Duties, Classifications - Single class code may include several related descriptions of activities/operations. It is extremely important to enter the specific classification description or, at least, a brief statement regarding the duties of the employees. Enter as much information as necessary to avoid mis-classifying the operations.
- No. of Employees, Full Time/Part Time - Number of employees to whom the classification applies. The average number is sufficient when the total number fluctuates during the year. Underwriters use this number to determine if the payroll estimates appear adequate. Show full time and part time employees separately.
- Estimated Annual Remuneration - Total annual payroll for the class. Payroll means money or substitutes for money, such as the value of meals or lodging if provided. Accurate payroll estimates help avoid additional premium requirements being discovered during an audit. Do not include overtime premium.
- Rate Manual Rate - for the classification from the appropriate state manual.
- Estimated Annual Premium - The rate is applied (multiplied) to every $100 of remuneration (payroll) and the result is the Estimated Annual Premium for this classification.
Nature Of Business / Description Of Operations
This section informs the underwriter of each applicant - s business and the way it is conducted by premises. Operations, which may not be apparent in a general description, may be segmented by location. For example, location #1 may be the general offices while location #2 may be the warehouse. The section should include enough detail to enable the underwriter to understand and classify each operation. Do not just use the classification phraseology from the Commercial Lines Manual or SCOPES Workers - Compensation Manual, because they do not provide enough detail.
If the applicant is a manufacturer, describe the:
- Raw materials used
- Process of work performed
- Products manufactured; who uses them and how they are used
If the applicant is a contractor, describe the:
- Type of contractor
- Work performed
- Specialized equipment used
- Nature of sub-contracts
If the applicant is a merchant, describe the:
- Type of operation, wholesale or retail (if both, give the percentage of each)
- Merchandise sold; indicate if it is domestic or foreign product
- Services provided
- Whether or not the applicant delivers
If the applicant is a service organization, describe the:
- Type of service performed
- The applicant's clients (e.g., general public, truckers, restaurants etc.)
Determination Of Rates
Workers comp is not something that should be avoided; in most states it is required by law for any non-owner employees. The costs, however, can be manageable when business owners make efforts to prepare properly including your maintenance practices and safety procedures.
Prior to applying for coverage it is best to check into all state inspection laws. If you have not passed a fire inspection, for example, your ACORD 130 Workers Compensation Application may be denied. Secure your certificates of inspections as soon as possible. You can also help to lower your rates by organizing mandatory safety training for employees, and replacing older equipment with safer models.
One of the main coverage options that is considered when applying for worker's compensation is the medical component. Most payouts are focused on medical expenses. All equipment and work related activities should be considered when talking to an agent about medical claims. Your insurance company needs to be aware of all the risks possible in the work environment. This knowledge helps to set available coverage, as well as your rates. It is better to estimate a little higher on what you may need, instead of too low. Prepare for long-term medical care in case of claim.
Workers comp is meant to cover the expenses from accidents that cannot be blamed on other situations. Business owners should be vigilant about the upkeep of their property. When a ACORD 130 Workers Compensation Application is filed out, the workplace if often checked for liability of the injury. An application for workers compensation insurance may include an inspection of the property. This goal of this inspection is to give business owners a clear understanding of liability and possible complications. If the broker gives you a list of items to remedy, take care of them immediately. Your coverage may be limited or denied approval until you comply.
It is important to be truthful on this form. It says, "Any person who knowingly and with intent to defraud any insurance company or other person files an application for insurance or statement of claim containing any materially false information or conceals for the purpose of misleading, information concerning any fact material thereto commits a fraudulent insurance act, which is a crime and subjects such person to criminal and civil penalties (not to exceed five thousand dollars and the stated value of the claim for each such violation)*. *Applies in NY Only."
Being dishonest on this form could cause a claim to be denied down the road, or worse being accused of insurance fraud.
More On ACORD Forms
You can find more applications on the ACORD forms list.
ACORD 130 Workers Compensation Application - The Bottom Line
We hope this article on ACORD 130 Workers Compensation Application has been informative. Workers comp regulated at the state level. Claims under these policies are taken very seriously. Thorough applications, proper evidence, and medical evaluations help the insurer come to a decision concerning fault. Payouts can be large in compensation cases, requiring the policy to be detailed and clear. Business owners can ensure proper coverage by supplying accurate information on their application.
Find other ACORD forms here - ACORD 20 Certificate of Aviation Liability Insurance, ACORD 21 Certificate of Aircraft Insurance, ACORD 22 Intermodal Interchange Certificate of Insurance, ACORD 23 Vehicle or Equipment Certificate of Insurance, ACORD 24 Certificate of Property Insurance, ACORD 25 Certificate of Liability Insurance, ACORD 27 Evidence of Personal Property Insurance, ACORD 28 Evidence of Commercial Property Insurance, ACORD 125 Commercial Insurance Application, ACORD 126 Commercial General Liability Section, ACORD 130 Workers Compensation Application, ACORD 140 Property Section