Company's failure to pay premium results in liability for worker's injury
Case name: Burris v. Propst Lumber & Logging, Inc., No. 4904 (S.C. Ct. App. 11/02/11).
Ruling: The South Carolina Court of Appeals held that a carrier was not liable for workers' compensation because it was not providing coverage to a company on the worker's date of injury.
What it means: In South Carolina, a carrier is authorized to exercise its discretion as to when a premium endorsement is necessary.
Summary: A logging company contracted with a carrier for workers' compensation insurance coverage. After the policy period ended, the carrier executed an audit resulting in an invoice to the company for an additional payment for the policy period. The company also renewed the policy for the subsequent year. The carrier sent a notice of additional premium to supplement the estimated premium the company paid for the subsequent year. The carrier then sent a notice canceling the policy for the company's failure to pay additional amounts on the policy. The company made additional payments past the carrier's 60-day deadline, and the carrier reinstated the policy, but a lapse in coverage existed. Later, the carrier canceled the policy. A worker for the company injured his leg and back while working. The carrier denied that it provided coverage on the date of injury. The South Carolina Court of Appeals held that the company's insurance policy did not provide coverage on the worker's injury date, so the carrier was not liable.
The court said that the policy's provisions were consistent with the assigned risk supplement's requirement for a premium endorsement to an assigned risk policy when a carrier discovers information indicating a need to more accurately reflect the exposure base or classification of an employer. Also, the company's policy was an assigned risk policy provided by the carrier pursuant to the assigned risk plan.
The company argued that the assigned risk supplement did not require the carrier to issue a premium endorsement. The court disagreed even though the additional premium was less than 25 percent of the estimated annual premium. A carrier is authorized to exercise its discretion as to when a premium endorsement is necessary.
The court also disagreed with the company's argument that the carrier failed to timely return the unearned portion of the premium it paid. The court explained that the carrier was not required to immediately return the unearned premium upon cancellation of the policy.
Read more at the WorkersComp Forum homepage.
December 19, 2011
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