Recently, I received an email from one of our operators with a question he believed might be useful in my blog. The question addressed a situation that can happen at any wash with employees. In this situation, an employee took it upon himself, against company policy, to drop off a cash deposit on his way home. After leaving the bank, he was involved in a serious auto accident. The question: Would this be covered by workers’ compensation?
The debate on the answer to this question could go in a multitude of directions and would ultimately be decided by the workers’ compensation board. However, the situation itself raises more important issues than whether or not workers’ comp would cover this incident. The following are some considerations that this scenario should provoke in response.
How should you proceed with a claim that is questionable?
When an incident occurs, it is imperative that it be reported as soon as PRACTICAL. This applies to employee injuries that may fall under workers’ compensation, as well as customer injuries that may create medical or liability issues. The legal climate and mandatory coverage provided vary greatly by state, and there is often no universal answer to whether or not the insurance company should be responsible for payment and/or legal defense. This all can be open to interpretation and, too often, can contradict what you believe to be common sense reasoning. Making assumptions about how a claim will be resolved may put your company and assets at risk.
Related: Preventing workplace accidents
Here are a few points to keep in mind regarding timely and effective claims reporting:
- In an effective safety management plan, it is best to report and file all claims. An incident may turn out to be an early indicator of an underlying condition that could lead to more serious injuries.
- Preserving evidence and gathering witness statements is most effective in the early stages of an incident. Not reporting these events may prejudice the rights of the insurance company and possibly negate coverage that might otherwise have been available.
- It is possible for a claim to involve fraud. Without knowledge of the incident, the company may be denied the opportunity to initiate specific procedures that are normally used to successfully fight these cases, i.e. setting up surveillance or interviewing associates.
- In the case of a claim that might be considered a workers’ compensation loss, there are often severe penalties and/or fines associated with reporting a claim late. As mentioned earlier, this depends on your state.
- Insurance companies generally have a specialist that can work with an injured employee or customer and help mitigate the size of the claim. The sooner they are involved, the greater the potential impact.
- The insurance provider is often more qualified to do what is necessary to keep injuries from escalating into more serious conditions. For instance, a loss that starts out as a minor cut might turn into an infection that creates a larger complication, especially if the person is a diabetic.
This blog is not intended to suggest that the operator that approached me with this idea did anything inappropriate. It did cause me to pause and assess the circumstances beyond the specific example I was given. The bottom line is that you pay a lot of money to buy insurance protection for your company. Using as many of their services and expertise as you can is just good business sense.
I know that many owners and operators are concerned that too many reported claims will either jeopardize their renewal or significantly increase the cost. Sometimes, there are better alternatives to managing claims than electing to accept responsibility with regard to what is covered by insurance by paying or denying a loss. For instance, it might be a better decision to participate in the costs of the loss by taking a larger deductible. Become actively involved with your insurance carrier’s loss prevention department and provide as much guidance as possible to the claims department specialists, keeping in mind that they often don’t know your business as well as you or your employees do. I believe, in the end, you will be better served by making these choices.
Mike Benmosche, CIC, is the national carwash program manager for McNeil & Co. McNeil & Co., with over 25 years in business, has become a nationwide leader in specialized risk management and insurance, specializing in the professional carwashing industry. For more information, please visit www.mcneilandcompany.com.