Workers compensation insurance in some ways is one of the more straight forward property and casualty insurance policies that you can buy.  In North Carolina, you simply multiply your payroll times the rate per $100 of payroll, add the expense constant and your mod factor and you are done.  If you have a claim, the NC statute tells the insurance company what is covered and how much to pay for each type of injury.  It is clean and simple because the North Carolina statutes spell out the details of what and who is covered and when and for how much.   But what happens when you cross state lines to do work or to hire other employees?   That’s when it gets tricky.

The starting point for this article is North Carolina and North Carolina workers compensation insurance rules.  If your business is domiciled in some other state besides, North Carolina then some of what you read in the blog may or may not apply to you.  That said, let’s get on with the discussion here.

There are several ways in which going out of state can get a company in trouble with workers compensation rules and laws.  The most vulnerable businesses are contractors who can pick up and go to another state to do jobs there.  Many of these are contractors whose work opportunities here in North Carolina may be diminished by the economy and so they chase storms and other natural disasters to find work in other states. 

If you take your North Carolina employees (those who live in NC and were hired in NC by your NC based company) to work on jobs in other states, then your North Carolina workers compensation policy will protect your company from losses that may happen on those jobs.  If you pick up employees while you are in that other state, then you may find yourself stuck in a coverage gap.  Some states will allow those new, out of state, employees of yours to choose which state work comp rules they want to file their claim under.  Of course they will choose the state with greatest benefits for them and their claim.  If that happens to be a state other than NC, then you may be paying some of the claim yourself.  This is because your NC workers compensation policy could be limited to just NC coverage and that is all that the insurance company will pay for a claim no matter which state rules the employee chooses to follow.

The solution to this problem is to let your insurance company know who is working where and let them add that state and those rates for that work in that state to your policy.  A catch all type of solution which is less fail safe, is to endorse the all states endorsement on to your workers compensation policy.   The all states endorsement on a NC workers compensation policy will extend benefits for your policy to match those of the states listed on the endorsement. 

The other area where employers can run into trouble is with the employees who live in another state from the one in which the business resides.  This can happen with businesses located near state lines.  If you are in NC and located near the Virginia border for instance, if you hire employees who live in Virginia, then you should add Virginia rates and class codes for those employees on your staff.

The all states endorsement can leave you at risk because of the existence of monopolistic state fund states.  These states require that all workers compensation insurance in their state be handled by the state government workers compensation program and no private insurance companies are allowed to write workers compensation insurance in these states.  If you operate in one of these states and have a claim there, your only protection on your policy will have to come from your employers’ liability insurance section of your workers compensation insurance.  This may be adequate if your exposure is only incidental but if you are running ongoing projects and operations in that state or hiring employees that live in that state, my advice is that you purchase a policy from that state’s monopolistic state fund.

Crossing state lines to do work or to hire employees can present unique workers compensation exposures to small companies.  If you plan to work in or hire in other states, it is best that you check with your agent and make sure that your workers compensation insurance company know exactly what you are doing and where so that they can amend your policy to make sure that you have the protection that you need.

When you bought your auto insurance policy, it’s a pretty good bet that you didn’t stop to think about which parts will be used for your car if it is wrecked.  We all just assume that the cars will be repaired and put back on the road, as good as new.  But North Carolina law and your auto insurance policy language could leave you feeling like you didn’t get what you thought you paid for. 

OEM stands for original manufacturer’s equipment and this moniker is used for parts built by your car company for your car.  If you have a Toyota Highlander, then chances are if that vehicle is wrecked, you will expect that all repairs will be made with Toyota parts built for the Highlander.  But that assumption would be wrong.  Insurance companies have no obligation under the NC auto insurance policy language to make sure that all replacement parts used in a repair are OEM parts.  In fact, since OEM parts generally cost more, most repairs that the insurance company pays for are done with replacement parts that were not manufactured by the original car manufacturer.

In truth, these replacement parts may be as good or even better quality than the OEM parts.  But people’s expectations are for OEM parts so bad feelings can be generated in the claims process when a person, whose car was hit by someone else, discovers that the insurance company paying the claim won’t foot the bill for OEM parts in his or her car.  The solution to this problem is to take action ahead of time.  If OEM parts are a big deal to you, then you can add the OEM parts endorsement to your auto policy to make sure that the costs of these parts is covered.  There are a few restrictions with the OEM parts endorsement on the North Carolina auto insurance policy.  First of all, most insurance companies will require that you make the choice to add this endorsement within 60 days of the purchase of a new vehicle.  Most will only allow you to add the endorsement to a vehicle that you purchased brand new and usually they will only allow the endorsement to remain on your policy for 7 years.  After that time, the coverage will be deleted.  One of the companies that we represent will let you add the endorsement at any time and will allow you keep it on the policy until your vehicle is 10 years old so there are some exceptions to these rules.

The OEM endorsement usually costs about 5% more on your comprehensive and collision insurance premiums.  For me, this is not a great buy, as I’m not very hung up on the OEM parts issue.  But I know for some people, this could be very important.  Now, one more thing to keep in mind:  If you have OEM coverage on your policy and you are hit by another person and that person is at fault, then your claim is at the mercy of their insurance company.  In this case, you can still file a collision claim with your insurance company so that you can benefit from the OEM endorsement.  If you go this route, then you will have to pay the collision deductible on this claim and wait to be reimbursed by the other party’s insurance company if and when your insurance company files a subrogating claim against them and collects.  This does remove you from control over the claim somewhat, especially in terms of recovering your deductible costs.

North Carolina auto insurance is complicated and there are many angles to consider when setting up your policy.   From just this one example you can see that do it yourself car insurance is a bad idea.  At Clinard Insurance Group, located in lovely Winston Salem, NC, we write thousands of auto insurance policies for our customers located all across the state of North Carolina.  We will take as much time as you need to make sure that you understand all of your options and that you are completely comfortable with your choices.  Please give us a call for help with your auto insurance or your home insurance.  You can reach us toll free, at 877-687-7557.