consumer's guide to insurance for small business owners (opens

PI-085 (R 07/2018)

CONSUMER'S GUIDE to

• Business Owner's Package Policy• Auto Insurance• Worker’s Compensation Insurance• Health Insurance

oci.wi.gov P.O.Box7873•Madison,WI53707-7873

STATE OF WISCONSIN OFFICE OF THE COMMISSIONER OF INSURANCE

Insurance for Small Business Owners

https://oci.wi.gov/pages/homepage.aspx

2State of Wisconsin, Office of the Commissioner of InsuranceConsumer's Guide to Insurance for Small Business Owners

The mission of the Office of the Commissioner of Insurance . . .

Leading the way in informing and protecting the public and responding to their insurance needs.

Ifyouhaveaspecificcomplaintaboutyourinsurance,referitfirsttotheinsurancecompanyoragentinvolved.Ifyoudonotreceivesatisfactoryanswers,contacttheOfficeoftheCommissionerofInsurance (OCI).

Visit oci.wi.gov tofileacomplaintonlineortoprintacomplaintform.

Phone(608)266-0103(Madison)or(800)236-8517(Statewide)

Mailing AddressOfficeoftheCommissionerofInsuranceP.O. Box 7873Madison,WI53707-7873

[email protected],phonenumber,ande-mailaddress.

Deaf, hearing, or speech impaired callers mayreach OCI through WI TRS.

Consumer's Guide to INSURANCE FOR SMALL BUSINESS OWNERSThispublicationisnota legal analysis of your rightsunderanyinsurancepolicy or government program. Your insurance policy,programrules,Wisconsinlaw,federallaw,andcourtdecisionsestablishyourrights.Youmay want to consult an attorneyforlegalguidanceaboutyourspecificrights.

OCIdoesnotrepresentthe information in this publicationiscomplete,accurate or timely in all instances. All information issubjecttochangeonaregularbasis,withoutnotice.

Publicationsareupdatedannuallyunlessstatedotherwise.

Forpublications online,visit oci.wi.gov

Aprintedcopyofall OCIpublicationscan beorderedonlineor bycalling 1-800-236-8517

One copy of this publication is available FREE of charge. All materials may be printed or copied without prior permission.

STATE OF WISCONSIN - OFFIC

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https://oci.wi.gov/Pages/Homepage.aspx

mailto:ocicomplaints%40wisconsin.gov?subject=Insurance%20Complaint



Table of Contents

Page

I. Business Owner's Policy ................................................................................................................... 5

A. Property Insurance Coverage ..................................................................................................... 5 B. LiabilityInsuranceCoverage ...................................................................................................... 5 C. Other Coverages ......................................................................................................................... 7 D. Optional Coverages .................................................................................................................... 8 E. BuyingPropertyandLiabilityInsurance—ThingstoConsider ................................................... 9

II. RequiredCoverages .......................................................................................................................... 10

A. Auto Insurance ............................................................................................................................ 10 B. Worker's Compensation Insurance ............................................................................................. 15

III. Insuring Your Home Business ........................................................................................................... 21

IV. UmbrellaLiabilityInsurance .............................................................................................................. 22

V. RiskManagement/LossControlMeasures ........................................................................................ 22

VI. Filing a Claim ..................................................................................................................................... 23

A. How to File a Property Damage Claim ........................................................................................ 23 B. HowtoFileaLiabilityInsuranceClaim ....................................................................................... 24 C. HowtoFileYourMotorVehicleClaim ......................................................................................... 24

VII. FloodInsurance ................................................................................................................................. 24

VIII. Health Insurance ............................................................................................................................... 25

A. Types of Coverage ...................................................................................................................... 25 B. AffordableCareAct ..................................................................................................................... 25

IX. Choosing a Plan ................................................................................................................................ 26

A. Fee-for-Service Health Plan ........................................................................................................ 26 B. DefinedNetworkHealthPlan ...................................................................................................... 27 C. FeaturesIncludedinMostHealthPlans ..................................................................................... 27 D. RequirementsApplicabletoAllHealthBenefitPlans .................................................................. 28 E. Other Insurance Programs .......................................................................................................... 29 F. Other Types of Policies ............................................................................................................... 30

X. DisabilityIncomeInsurance ............................................................................................................... 30

A. What it Covers ............................................................................................................................ 30 B. ThingstoBeAwareofRegardingDisabilityInsurance ............................................................... 31 C. MedicalUnderwriting .................................................................................................................. 31

XI. Buying Insurance ............................................................................................................................... 32

XII. Before Disaster Strikes ...................................................................................................................... 33

XIII. Legal Protections ............................................................................................................................... 33

XIV. Unfair Discrimination ......................................................................................................................... 33

Glossary ......................................................................................................................................................... 34


Fewthingsinlifeareriskierthanlaunchingandrunningyourownbusiness.Asasmallbusinessowneryouneedtodealwithcomplexissuessuchasbusinessplans,accountingsystems,payrollprocesses,employeerecruitment,cashflowproblems,marketing,andriskmanagement.

Asabusinessowneryouhavetodealwithalargearrayofinsuranceneedssuchasproperty,liability,auto,worker’scompensation,health,ordisabilityinsurance.Thispublicationisdesignedtotellyouaboutthedifferenttypesofinsuranceavailable,howtobuythecoverageyouneed,andunderstandhowtofileacomplaintwiththeOfficeoftheCommissionerofInsurance(OCI).

Propertyandliabilityinsurancearecriticalcoveragesasmallbusinessownerneeds.Propertyinsuranceprotectssmallbusinessownersfromlossesduetodamagetophysicalspaceorequipmentandasaresultoftheft.Liabilityinsuranceofferscertainprotectionstoasmallbusinessowner.Forexample,ifsomeonefallswhilevisitingyourbusinesspremisesoracustomerishurtbyaproductyourbusinesssells.

Property InsurancePropertyinsurancemaybeoneofthemostimportanttypesofinsuranceintermsoffinanciallyprotectingthepropertyandphysicalassetsofyourbusiness.Typesofpropertyabusinessneedstoinsureinclude:

• Buildingsandotherstructures,leasedorowned• Furniture,equipment,andsupplies• Leasedequipment• Inventory• Moneyandsecurities• Recordsofaccountsreceivable• Improvementsandbettermentsyoumadetothepremises• Machinery• Boilers• Dataprocessingequipmentandmedia,includingcomputers• Valuablepapers,books,anddocuments• Mobileproperty,suchasautomobiles,trucks,andconstructionequipment• Satellitedishes• Signs,fences,andotheroutdoorpropertynotattachedtoabuilding• Intangibleproperty(goodwill,trademarks,etc.)

3 types of property insurance plans:• Basic Property Insurance Form

Generallycoverslossescausedbyfireorlightningandthecostofremovingpropertytoprotectitfromfurtherdamage(i.e.,removinginventoryorequipmentfromadamagedbuildingsoitwillnotbestolen).

• Broad Form Includesbasiccoveragepluscoveragefor“extendedperils,”includingwindstorm,hail,explosion,riotandcivilcommotion,aircraft,andvehiclesthatdamagethepropertyoftheinsured.

• Special Form Includesbasicandbroadcoverage,andcoversalldirectphysicallossesexceptconditionsspecificallyexcludedaslistedinthepolicy.

Liability InsuranceLiabilityinsurance,alsocalledCommercialGeneralLiability(CGL),coversfourcategoriesofeventsforwhichyoucouldbeheldresponsible:bodilyinjury;damagetoothers’property;personalinjury,includingslanderandlibel;


andfalseormisleadingadvertising.CGLcoveragepaysfortheinjuredparty’smedicalexpenses.Itexcludesyouremployees,whoarecoveredbyworker'scompensation.

3 types of legal damages people may sue you for (typically covered by a CGL policy):• CompensatoryDamages

Financiallossessufferedbytheinjuredpartyandfuturelossestheymaysufferresultingfromaninjurythey claim in the lawsuit

• GeneralDamages Nonmonetarylossessufferedbytheinjuredparty,suchas“painandsuffering”or“mentalanguish”

• PunitiveDamages Additionalpenaltiesandchargesthedefendantmustpay

I. Business Owner's Policy (BOP)Onepackagepolicyfrequentlypurchasedbysmall-tomid-sizebusinessesistheBusinessOwner'sPolicyorBOP.BOPisapackagepolicydesignedtomeetinsuranceneedsofsmalloffices,stores,apartmenthouses, andcertaintypesofsmallservicesandprocessingbusinesses.

ThekeytowhetherabusinessowneriseligibleforBOPisthesizeofthepremises,thelimitsofliabilityrequired,thetypeofcommercialoperationitis,andtheextentofitsoff-premisesservicingandprocessingactivities.

BOPincludespropertyinsuranceforbuildingsandtheircontents.Thepackagepolicymayalsocoverlossofbusinessincomeandextraexpenseresultingfromafireorsimilarinsuredperil.TheliabilitysectionofBOPincludescoverageforbodilyinjuryorpropertydamageabusinessmaybeliablefor.

NOTE:BOP does not cover professional liability(liabilityclaimsarisingfromwrongfulpracticebyprofessionals),autoinsurance,worker’scompensation,health,ordisabilityinsurance.Thesemust tobepurchasedseparately.

A. Property Insurance CoverageBOPprovidestwobasicpropertycoverageforms:thestandardformandthespecialform.Bothformscoverbuildingsandmostbusinesspropertyonareplacementcostbasis.Replacementcostcoverageiswhatitactuallycoststoreplaceorrestoretheitemwithoutdeductingfordepreciation.Donotconfusereplacementcostwithactualcashvalue.Actualcashvalueisusuallyfiguredoutbytakingthereplacementcostoftheitemandsubtractingdepreciation.Forexampleifyour7-year-olddeskthatcost$500wasdamagedinafire,itmighthavedepreciated50%.Therefore,youwouldbepaid$250forit.

Ownersofolderbuildingsforwhomreplacementcostcoveragemaybedifficultortooexpensivetoobtainmightconsidertheactualcashvalueoption.Actualcashvalueisofferedasanoptionforbuildings.

ThepropertycoverageunderBOPautomaticallyincludesotherpeople’spersonalpropertytotheextentthebusinessownerislegallyliableforthedamage.

B. Liability Insurance CoverageDefendingagainstalegalcomplaint,evenaminorone,iscostly.TheliabilitycoverageinBOPprotectstheassetsofyourbusinesswhenitissuedforsomethingyourbusinessdid(orfailedtodo)thatcausedinjuryorpropertydamagetosomeoneelse.


TYPES OF CLAIMS COVERED BY LIABILITY

BOP liability covers claims in 4 basic categories of business liability:LiabilitycoverageinBOPalsopaysformedicalexpensesofpersons,otherthanemployees,whosustaininjuriesattheinsuredbusinessorasadirectresultoftheoperationsoftheinsuredbusiness.

LiabilitycoverageinBOPcoversliabilityclaimsthatstemfromownershiporcontrolofpremises,productsandcompletedoperations,andcertaintypesofcontracts.Theterm“premises”includesland,buildingandotherproperty.Thispartofthepolicy,knownalsoasowners’,landlords’,andtenants’,coversclaimsduetofailuretoavoidharmingcustomers,salespeople,orotherpeople(eventrespassers)whoareontheirpremises.

“Products”coverageincludesclaimsthatstemnotonlyfromthemanufactureofproductsbutalsofromtheirdistributionandsale.“Completedoperations”isworkthathasbeenperformed,suchastherepairingofappliances,thecleaningofchimneys,ortheinstallationofplumbing.

However,liabilityinsurancewillnotprotectyouagainstclaimsarisingfromnonperformanceofacontract,wrongfulterminationofemployees,sexualharassment,orraceandgenderlawsuits.Thisisanothergoodreasontocarefullyreadyourpolicy.

Single Limit Liability CoverageBOPhasasinglelimitforliabilityandmedicalexpenseswithaseparatemedicalexpenseslimitperpersoninjured.BOPalsohasseparatelimitsforproducts/completedoperations,thatis,theworkcarriedoutandcompletedbythebusiness,suchasrepairingelectricalappliances,andforadvertisingandpersonalinjury,aswellasageneralaggregatelimitandlimitsperpersoninjuredandperoccurrence,andlimitsondamageperfire.

ThesinglelimitinBOPmakesdecisionsonhowmuchliabilityprotectiontopurchaselesscomplicated,butitalsoreducesflexibility.Ifyourproducthasahigherthanaverageproductliabilityrisk,suchastoys,BOPmightnotprovideenoughliabilitycoverage.

Forexample, yourbusinesshaschosena$500,000limitonliabilityandmedicalexpensesanda$5,000limitperpersoninjured.Ifyourstoreneededadditionalliabilitycoverage,youcouldpurchasehigherlimitsoranumbrellaorexcessinsurancepolicy.

Defense and Legal CostsBOPobligatestheinsurertoprovideadefenseandpayforvariouslegalcostswhenthereisacoveredliabilityclaimorlawsuitagainsttheinsuredbusinessownerandtheclaimiscoveredbythepolicy.Thisprovisionnotonlyprotectsabusinessfromlegalexpenses,butitalsogenerallymakesavailableamoreexpertdefensethanthebusinesswouldbeabletoaffordonitsown.

ExclusionsThemostimportantexclusiontonoteistheexclusionforinjuryandpropertydamagethatisintended or expected by the policyholder.Forexample,ifyoudistributedaletterthatyouknewcontainedmisleadingordisparaginginformationaboutacompetitorwiththeintenttoputthemoutofbusiness,thepolicywouldnotcoverthecompetitor’sclaimfordamages.

Bodily InjuryDamage to a person’sbodyor physical wellbeing

Property DamageDamage to any type of real estate or personal property such as furniture.

Personal Injury Damage to a person’s orbusinessentity’sreputationorbasicrights,suchastherighttobefreefrominterferenceandtohaveprivacy.(Includesslanderorlibel.).

Advertising Injury Theharmcausedastheresultoftheinsuredadvertisingitsgoodsorservices,suchasanadvertisementthatslandersanotherorganization'sproductsorservices.


BOPexcludesliabilityforexposuresthatwouldbecoveredunderotherinsurancecoveragessuchasworker’scompensationandprofessionalandautoliabilityinsurancepolicies.

Alsoexcludedareclaimsresultingfromdamagetothepropertyofothersinthebusinessowner’scare,custody,andcontrol.Thisisbecausecoverageforsuchdamageiscoveredunderpropertypolicies.

Lossesrelatingtocontractsoragreements,injuriescausedbyexposuretonuclearradiationandliabilityforinjuryorpropertydamagecausedbysubstancesthatpollutetheenvironmentareexcluded.

BOPalsoexcludesallcoverageforpollutionclaims.However,toprotectyourinterestinpropertyyouownandtopreventpollutantsfrominjuringothers,BOPpropertyformprovides$10,000towardthecostofextractingthepotentiallypollutingsubstancesfromthepolicyholder’sownpremises.Ifyouneedliabilitycoverageforenvironmentalpollution,youmustpurchaseaspecialpolicy.

Manufacturersofproductssubjecttoproductrecall,suchasfooditemsortoys,shouldconsiderpurchasingaspecialpolicytocoverthisexposure.ProductsareexcludedfromBOPpolicybecauseofthecostsincurredinarecall.

CoverageforadministeringcertainkindsofprofessionalservicesorfailuretorendersuchservicesmayalsobeexcludedfromBOP,dependingontheextentofservicesprovided.

Legalactionsthatdonotinvolveaclaimforbodilyinjury,propertydamage,personalinjury,oradvertisinginjuryarenotcovered.BOPdoesnotcovermostcontractdisputes,actionsbygovernmentalagencieschargingabusinesshasfailedtoabidebyregulationsorstatutes,orpollutioncharges.

AclaimforbacktaxesorapenaltyforfailuretoprovideasafeworkplaceisnotcoveredbyBOP.

It is important to ask your agent to explain anything about the policy you do not understand and to answer any other questions you might have.Amongothermatters,youshouldknowwhatthepolicydoesanddoesnotcover,includinganydeductiblesorcoinsurancerequirements,exclusions,exceptions,orlimitations,howandwhentomakeaclaim,andhowclaimsareprocessed.

SPECIFIC INDUSTRY COVERAGECertaincategoriesofsmallbusinesses,suchasrestaurants,wholesalers,florists,garages,etc.,wouldnotbeeligibleforaBOP,regardlessofsize,becausetheyhavespecializedinsuranceneeds.Manyinsurancecompaniesofferspecificallydesignedpoliciesthatusuallyincludespecialtycoveragethatisadvantageoustothosebusinesses.Formoreinformation,contactyouragentormembersofyourtradeassociation.

C. Other Coverages• BUSINESSINTERRUPTIONINSURANCE

Thisprovidescoverageifthebusinesspremises,vitalbusinessequipment,orotherbusinesspropertybecomesunusablebecauseofafire,explosion,orsimilarcoveredpropertyperil.Asaresultmostbusinesseswillsuffer:

• lossofnetprofitthatwouldhavebeenearned.

• paymentsforexpensesthatcontinueeventhoughthebusinessisnotoperatingnormally (e.g.,debtpayments,taxes,salaries,andemployees).

Theselossesmaybecoveredbybusinessinterruptioninsurance.Thepurposeofbusinessinterruptioninsuranceistoprovidethebusinessownerwithwhatthebusinessitselfwouldhavedoneiftherehadbeennoloss.BusinessinterruptioninsuranceisincludedinBOPbutmayalsobepurchasedasanendorsementtothefirepolicy.


• EXTRAEXPENSEINSURANCE providescoverageforabusinesstocontinueoperatingregardlessoftheextentofdamagetotheirproperty.Manybusinessescanresumeoperationsfairlyrapidlybutmayincurextraexpensesbyrelocatingtotemporaryfacilities,buyingorleasingreplacementequipment,supplies,furniture,andmachines,quicklygettinginnewmerchandise,andnotifyingclientsandcustomersofthemove.Extraexpenseinsuranceprovidescoveragefortheseincreasedcostsofresumingbusiness.

D. Optional CoveragesInsurancecompanieshavedesignedpackagepoliciesforbusinessessoallmajorpropertyandliabilityexposuresarecoveredinasinglepolicy.Youcanaddavarietyofcoveragestothebasicpackageforanadditionalpremiumthroughanendorsementthataddsclausestotheinsurancecontract.

• OUTDOOR SIGNS BOPcoversonlysignsattachedtothebuildingitself.Theoptionalcoverageappliestosignslocatedonotherpartsofthebuilding.

• EXTERIORGRADEFLOORGLASS Thecoverageforexteriorgradefloorglassreferstoglassatgroundorbasementlevelwithanexteriororoutsideexposure.

• MONEY AND SECURITIES Themoneyandsecuritiesoptionprovidesall-riskcoverageforvaluableswherevertheyare—atthebank,atthebusinessowner’soranotherperson’shome,onthebusinesspremises,orintransitbetweentheseplaces.Youchoosethecoveragelimitsyouneed.

• CRIME INSURANCE Crimeinsuranceprotectsbusinessesfromtheftandmaliciousdamage,suchasemployeeembezzlement.

• E-INSURANCE OR INTERNET BUSINESS INSURANCE E-insurancecoversweb-basedbusinessesfordamagescausedbycomputerhackersandviruses.

• EMPLOYEE DISHONESTY Theemployeedishonestyoptionprovidescoverageforlossofbusinessproperty,includingmoneyandsecurities,duetoemployeetheft,embezzlement,fraud,oranyothercriminalactonthepartofanemployee.Youchoosethecoveragelimitsyouneed.

• MECHANICAL BREAKDOWN Themechanicalbreakdownoptionprovidesthesamekindofprotectionavailableunderaseparateboilerandmachinerypolicy.

• A boiler and machinery policyprovidesspecializedcoverageformachineryandpower-producingequipment(seebelow).Coverageisprovidedforlossesresultingfromthebreakdownofmechanical,electrical,andpressureequipmentrangingfromboilerstorefrigerationsystems,engines,compressors,pumps,motors,transformers,andothermachinery.

• Boilerandmachinerypoliciescoverbothpropertyandliabilitylossesaswellasthereasonablecostofmakingtemporaryrepairsandexpeditingrepairwork.Propertycoverageisprovidednotonlyfortheequipment,butalsoforotherpropertyofthepolicyholderdirectlydamagedasaresultofanaccident.

• Aboilerandmachinerypolicyalsomaybeendorsedtocoverlossesresultingfromaninterruptionofbusinessfollowinganinsuredaccidentandlossesduetospoilageofspecifiedproperty,suchasfoodandotherperishables,fromlackofpower,heat,steam,light,orrefrigerationresultingfromaninsuredaccident.

• CONTINGENT LIABILITY, DEMOLITION COSTS, AND INCREASED COST OF CONSTRUCTION Coveragefordemolitioncostsandincreasedcostsofconstructiontocomplywithbuildingcodesprotectsthebusinessownerfromexpensestoreconstructpropertytocomplywithbuildingordinances.


Animportantconsiderationwhenselectingthesecoveragesishowmuchpotentialdamagesyoucanaffordtopayyourselfwithoutcripplingyourbusiness’soperations.Thevalueofanoutdoorsign,forexample,maybesolowandthelikelihoodofdamagesominimalitisnotworthtakingoutinsurancetocoverit.Inthesameway,youcansavemoneybytakinghigherdeductiblesonthecoveragesyoudodecidetopurchase.

E. Buying Property and Liability Insurance— Things to ConsiderUnderwriting ProcessInsurancecompaniesdecidethetypesofriskstheywillaccept.Thisisreferredtoas“underwriting”andistheprocessbywhichaninsurerselectsandclassifiesrisksaccordingtotheirdegreeofinsurability.

PremiumsThepremiumschargedforbusinessinsurancevarywidelyfromcompanytocompany.Itpaystoshoparoundtoobtainthebestvalueforyourinsurancedollar.Insurancepremiumsaredependentonanumberoffactors,includinglocation,ageandtypeofbuilding,useofbuilding,localfireprotection,choiceofdeductibles,applicationofdiscounts,andamountofinsuranceyoupurchase.

DeductiblesThecostofyourinsuranceisdirectlylinkedtoyourpolicy’sdeductibleamount.Thedeductibleistheamountofmoneythatyouagreetopayaspartofaclaimbeforeyourinsurerpaystheremainingamounttowardtheclaim.Deductiblesreducecostsbecauseyoupaythefirst$250or$500ofeveryloss.

Sinceyouareactually“self-insuring”forthedeductibleamount,youshouldaskifthesavingsisworthit.Itisagoodideatogetquotesforvariousdeductiblesbeforemakingyourselection.Deductiblesmayapplyseparatelytoeachbuildingcoveredortopersonalpropertyineachbuilding,withanaggregatedeductiblefor any one occurrence.

Building InsuranceWhatwillitreallycosttoreplaceyourbuildingintheeventoflossfromafireortornado?Aretherebuildingupgradesthatarerequiredbylawwhenyourebuild(e.g.,firesprinklersmayneedtobeinstalled)andwhatwilltheycost?Doesthepolicyyouareconsideringcovertheextracosttomeetcurrentbuildingcoderequirements?

Business Personal PropertyEverybusinessownssomepersonalpropertythatcouldsufferaloss.Whatwoulditcosttoreplaceallofyourfurniture,fixtures,inventory(minimumandmaximumvaluesduringtheyear),andbuildingupgrade (ifyoulease)?

Business Interruption CoverageYouneedtoconsiderhowlongitwouldtaketorestoreyourbusinessoperationsintheeventofafire. Wherewouldyoutemporarilyresumeoperations?Whatexpensescouldyoudiscontinuewhilerepairs arebeingmade?

Liability CoverageYoushouldcheckyourleaseandotherlegalcontractsyouhavesignedtoseewhatandhowmuchliabilitycoveragethecontractsrequireyoutocarry.Youmaywanttogetpricequotesforlimitsofinsurancebeyondwhatyouarerequiredtopurchaseaccordingtoyourcontractualobligationssoyoucanseewhathigheramountsofcoveragewillcost.Youmaydecidetoeitherbuyalltheliabilitycoverageyoucanafford,oryoumayonlywantwhatisrequired.Manypeoplebuywhatmakesthemcomfortableforapricetheycanafford.


Report Your Loss History AccuratelyFailuretoaccuratelyreportpastlossescouldallowaninsurancecompanytolegallydenyyourclaimandnotpayyoufortheloss.Itisimportanttodiscloseanylawsuitsinwhichyouhavebeennamedasapartyandforwhichinsurancecoveragewasprovided.Also,besuretoincludeanypropertyclaimsyouhavehadsuchasthoseforfires,thefts,orvandalism.

DiscountsDiscountsmaybeavailableifyouhavesprinklers,burglaralarms,andsecuritycameras.Makesureyoutellyouragentaboutanyupgradesorrenovationsdonetothebuilding,particularlytotheroof,heating,electrical,andplumbingsystems.

Your Insurance AgentYourinsuranceagentshouldfullyreviewthetypesofbusinesspropertyyouownandusetodiscoverwhatkindsofpropertyinsuranceyouneed.Thereisnosureanswerabouthowmuchliabilityinsurancetobuyforaparticularbusiness.Youshouldconsiderthedegreeofriskinthebusinessitself.Yourinsuranceagentcanhelpyoudetermineasatisfactorylimitofcoverageforyourspecificbusiness.

Askyouragenttoexplainanythingaboutthepolicyyoudonotunderstandandtoansweranyotherquestionsyoumighthave.Youshouldknowwhatthepolicydoesanddoesnotcover,includinganydeductiblesorcoinsurancerequirements,exclusions,exceptions,orlimitations,howandwhentomakeaclaimandhowclaimsareprocessed.

II. Required Coverages: Auto & Worker's Compensation

Wisconsinlawrequiresallbusinessownerspurchasecertaintypesofliabilitycoverageorshowproofoffinancialresponsibility.Whatfollowsisadescriptionoftheserequiredcoverages.

A. Auto InsuranceMostbusinessestodayoperatewithamotorvehicle.Ifthevehiclesaredamagedinanaccidentorstolen,thebusinesshastorepairorreplacethem.Ifthereisanaccidentandthebusinessisatfault,thebusinessmaybesubjecttolargeclaimsfrompeopleinjuredintheaccident.Abusinessautoinsurancepolicyhelpstocoverbothpropertyandliabilityrisksbusinessesfacebecauseoftheownershiporuseofautosandtrucks.

Anautoisdefinedasanymotorvehicledesignedforprimaryuseontheroad.Thisincludesalltypesoftrucksandtrailerspulledbytrucks.

Theinsuredisthepersonorentitywhoholdstitletothevehicle.Ownersofsmallbusinessesoftenusethesamevehiclesforbothpersonalandbusinesspurposes.Problemsmayoccuriftheinsuranceisnotwritteninthenameofthepersonorentitywithtitletothevehicle.Forexample,JohnSmithownstheXYZCompanythatownsthevehiclethatSmithdrivesforbothbusinessandpleasure.SmithtoldhisinsuranceagentheownedthecarsotheagentputSmith’snameontheautoinsurancepolicyandnotthecompany’sname.Smithisinvolvedinanaccident.Theremaybeproblemswhenheattemptstocollectonaninsuranceclaimtorepairthedamagetothecarbecausetheinsurancepolicyrequirestheownerofthevehiclebetheprincipalinsured.

Financial Responsibility Auto Insurance RequirementsWisconsinhasafinancialresponsibilitylaw.ItisdesignedtomakesureanymotoristlicensedtodriveinWisconsinhasinsuranceorenoughmoneytopayfordamagestoothersthatmaybecausedbyamotorvehicle.Theserequirementsmaybemetthroughinsurance,asuretybond,orself-insurance.DetailsareavailableattheDepartmentofTransportation(wisconsindot.gov),DivisionofMotorVehicles,HillFarmsStateOfficeBuilding,4822MadisonYardsWay,P.O.Box7910,Madison,Wisconsin53707-7910.


IfyoudecidetosatisfytherequirementsoftheWisconsinFinancialResponsibilityLawbybuyingautoinsurance,yourpolicymustcontainthreemajorparts—liabilityinsuranceforbodilyinjury,liabilityinsuranceforpropertydamage,anduninsuredmotoristcoverage.

If you buy insurance, your policy must provide the following minimum liability coverage:

• $25,000forinjuryordeathofoneperson

• $50,000forinjuryordeathoftwoormorepeople

• $10,000forpropertydamage

Thelawalsorequiresuninsuredmotoristcoverageof$25,000/$50,000forbodilyinjuryonly.

• BODILYINJURYLIABILITYINSURANCE Bodilyinjuryliabilityinsurancedoesnotprotectyouoryourcardirectly.Ifyoucauseanaccidentinjuringotherpeople,itprotectsyouagainsttheirclaimsuptothestatedamountsformedicalexpenses,lostwages,painandsuffering,andotherlosses.Itwillalsousuallypayiftheaccidentwascausedbyamemberofyourfamilylivingwithyouorapersonusingyourautowithyourconsent.

• PROPERTYDAMAGELIABILITYINSURANCE Propertydamageliabilityinsurancepaysforanydamageuptothestatedamountyoucausetothepropertyofotherssuchasacrushedfender,brokenglass,oradamagedwallorfence.Yourinsurancewillpayforthisdamageifyouweredrivingyourautoorifitwasbeingdrivenbyanotherpersonwith your consent.

• UNINSUREDMOTORISTCOVERAGE Uninsuredmotoristcoverageappliestobodilyinjuryyou,yourfamily,andotheroccupantsofyourvehicleincurwhenhitbyanuninsuredmotoristorhit-and-rundriver.Italsocoversyouandyourfamilyifinjuredasapedestrianwhenstruckbyanuninsuredmotoristorhit-and-rundriver.Itprotectsyoubymakingsuremoneyisavailabletopayforyourlossescausedbysomeoneelse.

Uninsuredmotoristcoveragedoes not cover your property damageanddoesnotprotecttheotherdriver.Yourinsurancecompanymaysuetheotherdriverforanymoneythecompanypaysyoubecauseoftheotherdriver’snegligence.

• UNDERINSUREDMOTORISTCOVERAGE Thisisanoptionalcoveragethatincreasesthepersonalinjuryprotectiontoyouandthepeopleinyourcaruptotheamountofcoverageyoupurchase.Itbecomeseffectivewhenthepartycausinganaccidenthaslowerlimitsthanyoupurchaseandtheaccidentcostsmore.Themaximumdollarspaidisthenthedifferencebetweenthetwolimits.

Forexample,assumetheunderinsuredmotorist(UIM)limitsselectedwere$100,000perpersonandthepersoncausingtheaccidenthadlimitsof$50,000perperson.Underthisscenario,youcouldcollectupto$50,000fromtheat-faultdriveranduptoanadditional$50,000(thedifferenceinlimits)underyourownUIMcoverage.UIMcoveragetypicallydoesnot“add”theamountyoupurchasedtotheamountavailablefromthepersoncausingtheaccident.

InsurersarerequiredtonotifypolicyholderswhodonothaveUIMcoverageofitsavailability.ThelimitsofUIMcoverage,ifacceptedafternotification,are$50,000perpersonand$100,000peraccident.

• MEDICALPAYMENTS Thisprovidesmedicalorfuneralexpenseforpeopleinjuredorkilledinyourcar.Italsocoversyouandmembersofyourfamilyifhitbyacarorinjuredwhileridinginanothercar.Medicalexpensecoverageisusuallysoldasasingleamountsuchas$1,000.Companiesmustofferthiscoveragebutyoudonothavetobuyit.


Physical Damage CoverageTherearethreebasictypesofphysicaldamagecoverageformotorvehicles:collision,comprehensive,andspecifiedperils.

• COLLISIONCOVERAGE Thisprotectsyourcarifyourcarcollideswithanobject,includinganothercar,orifitoverturns.Yourowninsurerwillpayforsuchdamageevenifthecollisionisyourfault.Limitsarebasedontheactualcashvalueofyourcaranditisusuallywrittenwithadeductibleof$100ormore.

• COMPREHENSIVECOVERAGE Thisprotectsyourcaragainstalmostalldamageexceptlosscausedbycollision.Thisincludesfire,theft,missiles,glassbreakage,fallingobjects,explosion,earthquake,civilcommotion,orcollidingwithawildbirdoranimal.Itisbasedupontheactualcashvalueofthecarandcanbewrittenwithadeductible.Flooddamagetoyourautoiscoveredifyourautoinsurancepolicyincludescomprehensivecoverage.

• SPECIFIEDPERILS Becausecomprehensivecoverssomanyperils,itcanbeveryexpensive.Forbusinessesthatwantthisbroadcoverage,alessexpensivealternativeisspecifiedperilscoverage.Thisissometimescalled“fire,theft,andcombinedadditionalcoverage,"or“CAC.”Itcoversmanyoftheperilscomprehensivecoversexceptwindshielddamage,butitdoessoonanamed-perilbasis.

Coverageforyourvehicleinanautoinsurancepolicyisnotbasedonreplacementcost.Theamountaninsurancecompanywillpayonanautophysicaldamageortheftclaimdependsonthe“actualcashvalue”ofthevehicle.Theactualcashvalueofthevehicleisthereplacementcostlessdepreciation,whichmostoftenisthecurrentmarketvalueatthetimeofloss.Therefore,thecompany’sobligationistorepairthecarbaseduponitsactualcashvalue,notitsreplacementcost.

Theinsurancecompanymaypaythebusinessownerthevalueofthelossinmoneyor,atitsoption,itmay (1)repairorreplacethedamagedorstolenvehicle,or (2)returnastolenvehicletothebusinessownerwithpaymentforanydamagecausedbythetheft.

Ifyouborrowmoneyfromabankorsomeotherfinancialinstitutiontobuyyourvehicle,thelenderwillprobablyrequireyoutopurchasephysicaldamagecoveragetoprotectbothofyourinterestsinthecar.

Safety Responsibility LawWisconsinhasaSafetyResponsibilityLaw.Thelawrequiresthatanytimeapersonishurtorkilled,someone’spropertyisdamagedover$1,000,orstate-orgovernment-ownedpropertyisdamagedover$200,itmustbereportedassoonaspossible.YoumustalsofileaDriver’sReportofCrashwithin10dayswiththeDivisionofStatePatrol.Ifapoliceagencyinvestigatesthecrash,youdonothavetofilloutthecrash report. The police will.

IfyouareinacrashinWisconsin,youshouldexchangeinsuranceinformationwiththeotherdriver.UndertheSafetyResponsibilityLaw,uninsuredmotoristswhoareinreportablecrashesmustshowtheycanpayforthedamagesandinjuriestheymayhavecaused.Thelawtakesawaythedriver’slicenseandvehicleregistrationoftheuninsuredmotoristwhocannotpayfordamagesorinjuriestheycause.

Formoreinformation,contact:Wisconsin Division of Motor Vehicles, Citations and Withdrawals Section—

Uninsured Motorist Unit P.O. Box 7983

Madison,Wisconsin53707-7983 (608) 266-1249


TYPES OF AUTO INSURANCE POLICIES

Auto Insurance for a Home-Based BusinessInmostcases,home-basedbusinessownerscanbecoveredbytheirpersonalautoinsurancepolicy.However,dependingonyourparticularuseofyourcar,youmayneedtopurchasehighercoveragelimitstoprotectyourselfandyourbusiness.

Inothercases,particularlyifyouaretransportingpeopleforanyreasonintheconductofyourbusiness,youshouldconsiderahome-basedbusinessautopolicy.

Ahome-basedbusinessautopolicyispricednodifferentlythanyourregularautopolicy.Insurancecompanieslookatthenumberofmilesyoudrive,whowillbedrivingthevehicle,yourdrivingrecord,andyourclaimshistoryinordertosetyourpremium.

Theliabilitylimitsyouchooseandyourcomprehensiveandcollisiondeductiblesarealsomajorfactorsinhowmuchyouaregoingtopay.Thehigheryourlimits,thehigheryourpremium.Lowerdeductiblesaregoingtocostyoumore,too.

Asahome-basedbusinessowneryouneedtopayattentiontoliabilitylimitsinordertoprotectbothpersonalandbusinessassets.Ifyoucauseanaccident,theinjuredpartiescangoafteryouasanindividualandasabusinessowner.Inordertominimizefinancialrisk,youmightconsiderhigherliabilitylimits.

Manyhome-basedbusinessesmoveequipmentfromjobtojob,likepowerwashersandladdersforhousepainters,orlawnmowersandothergardeningequipmentforlandscapers.Ifyouhaveahomeowner’sorrenter’sinsurancepolicy,theequipmentyouhaulfromjobsitetojobsiteisminimallycovered.Yourinsurerwilltypicallycoverdamagesfrom$250to$1,000,minusyourdeductible.

Ifyoupermanentlyaffixapieceofequipment,likeagenerator,toyourvehicle,thegeneratorwillnotbecoveredunlessyouincreaseyourinsuranceonyourvehicleinordertocoveritemspermanentlyattached.

Mostimportantly,ifyouarerelyingoneitherapersonalautoinsuranceorpersonalumbrellaliabilitypolicytoprovideyouwithprotectionforyourcompany’suseofvehicles,lookcloselyattheprovisions,asbusiness-relatedliabilitymaybeexcluded.

Business Auto Insurance PolicyAbusinessautoinsurancepolicycoversbothpropertyandliabilityrisksfacedbyabusinessownerbecauseofownershiporuseofautosandtrucks.Apolicycoveringavehicleusedinbusinessmayalsocoveryouremployeeswhentheyareoperatingtheirpersonalcarsforyourbusiness.

Theliabilityportionofthepolicyobligatestheinsurancecompanytopayuptothepolicylimitsintheeventofbodilyinjuryorpropertydamage.Theinjuryordamagemusthavebeencausedbyanaccidentandhaveresultedfromtheownership,maintenance,oruseofacoveredauto.

Whenthereisanautoliabilitylawsuitagainsttheinsuredbusinessandthelossiscoveredbythepolicy,theinsurancecompanyisobligatedtodefendthebusinessownerorsettlethelawsuit.Thepolicyleavesthedecisionentirelyuptotheinsurancecompanyaboutwhethertodefendorsettleagivenclaim.Theinsurancecompany’sdutytodefendorsettleendswhentheinsurancepolicylimitshavebeenexhaustedbythepaymentofjudgmentsorsettlements.

Therearethreeoptionsforliabilitycoverageunderthebusinessautoinsurancepolicy:(1)autosownedbythebusiness;(2)allautosowned,hired,orleased;or(3)allautos,includingthosethatarenotowned,hired,orleased.Mostbusinessownersshouldbuythethirdtypeofcoveragetoprotectthemselvesfromliabilitywhenanemployerorprincipalisdrivingapersonalautooncompanybusiness.


When is the business liable?Anemployerisgenerallyliableforactsofemployeeswhen they are acting within the scope of their employment.So,whenemployeesaredrivingvehiclesoncompanybusiness,regardlessofwhoholdstitletothevehicle,theemployerwillprobablybeliable.

Forexample,ifanemployeetakesacompany-ownedvehiclehomeatnight,generallyonthewaytoandfromhometheemployerisliable.However,iftheemployee takes that vehicle out later that night on personalerrands,theemployerwillusuallynotbeliablebecausetheemployeeisnotactingwithinthescopeofemployment.

Controlling Auto Loss ExposuresThecauseofmostaccidentsisthedriver.Employersshouldalwayscheckdrivingrecordsofanyemployeeswhowilldriveoncompanybusinessandneverallowpersonswithapoordrivingrecordtodrive.

Itshouldalsobecompanypolicythatdriversalwaysuseseatbelts.Drivingsafetyshouldbefrequentlyemphasized,andallvehiclesshouldbewellmaintained.

PremiumsPremiums for the property coverage portion of the auto insurancepolicyarebasedonbusinessuse,radiusorareasofuse,andwherethereisacombinationtruckandtrailerongrossvehicleweight(GVW)orgrosscombinationweight(GCW).

3 Types of Business Use:• Service use referstovehiclesusedtotransportpeople,tools,equipment,orsuppliestoandfrom ajoblocation.

• Retail use refers to vehicles that pick up property fromordeliverittoindividualhouseholds.

• Commercial useiswhenitdoesnotfitunder theserviceandretaildescriptions.

3RadiusClassifications:• Local—fewerthan50milesfromprincipal

point of garaging.

• Intermediate—morethan50andfewerthan 200 miles.

• Long distance—morethan200miles.

Fleet of VehiclesBusinessesthathaveafleetofvehicleswill,of course,havedifferentneedsthanabusinesswithoneortwo.Businessesneedtobeawareofhowinsurance

If You Are in an Accident• Call the police.

A police report can help if you have an accidentorifyourcarisstolenordamagedbyvandals.Whatlookslikeaminordentcouldbeseveralhundreddollars’worthofdamage.

• Obtain information. Writedownthenames,addresses,telephonenumbers,andlicensenumberofpersonsinvolved,includingwitnesses.Notethetime,date,location,roadconditions,makeandyearofvehiclesinvolved,insuranceinformation,apparentdamageandinjuries,andyourversionofwhathappened.Makeadiagramoftheaccident.Yourinsurancecompanywillneedcompleteinformationabouttheaccident.

• Call your agent. Phoneyouragentpromptly,evenifyouarefarfromhome.Haveyourpolicynumberready,plusalllicensenumbers,phonenumbers,andotherinformation.

• Ask your agent. Findoutwhatdocuments,forms,anddatayouwillneed.Ifyouhaveanyquestions,youragentwillbeabletoassistyouinfillingout the forms.

• Cooperate: answer all questions fully. Your insurer may call you for more informationorasktoexamineyourdamagedvehicle.Inordertodeterminetheextentofdamage,theymusthaveaccesstothevehicle.

• Take notes. Whenever you talk with insurance company employees,youragent,lawyers,police,orothers,writedownthedate,times,names,andsubjectsyoutalkedabout.Includealldecisionsorpromisesmade.

• Save receipts. Yourautopolicymaypayforincidentalssuch as a car rental or a hotel room if your accidenthappensoutoftown.Savecopiesofalldocumentsyousendorreceive.

• Settling your claim. Theclaimshouldbepaidpromptlyaftertheinsurerhasreceivedadequateproofofloss.Iftheinsurerrejectsyourclaimorpaysonlypartofit,youshouldbegivenanexplanationforthedecision.


policiesarewrittenforafleetofvehicles.Someprovidefleetcoverage,whichmeansthebusinessdoesnothavetonotifytheinsurancecompanywhenanewvehicleisadded;itiscoveredaspartofthefleet.Otherpoliciesdorequirenoticetotheinsurancecompanyofanewvehicle.Ifthenoticeisnotgiven,thenewvehicleisnotinsured.

Underwriting Guidelines for Auto InsuranceUnderwritingistheprocessinsurancecompaniesusetoselectandclassifyanapplicant’srisk.Insurersusetheirownunderwritingstandardstodetermineifyourbusinessiseligibleforinsuranceand,ifso,whatpriceyoushouldpayforcoverage.

Whenyouapplyforautoinsurance,yourdrivingrecordwillnotonlyaffectyourrates,itmayalsocauseyoutobedeniedinsurance.Wisconsinlawdoesnotpermitinsurerstoexcludedriversbyendorsement.Theyarepermittedtoratebasedonallmembersinthehouseholdregardlessofwhethertheyarerelatedbybloodor marriage.

Wisconsinlawdoesnotrequireinsurancecompaniestoextendagraceperiodforautoinsurancepremiumpayments.Ifpaymentisnotreceivedbytheduedate,theinsurancecompanyispermittedtocancelyourauto insurance policy for nonpayment of premium.

Whenreplacingyourautomobilepolicywithanothercompany,beawarethatthenewcompanyhas60daystounderwrite(examine,accept,orreject)yourapplication.Thismayincludesecuringmotorvehicle,credit,andclaimhistoryreports,aswellasverificationofotherinformationprovidedontheapplication.Yourpolicycanbecanceledduringthefirst60daysforanyadverseinformation,suchasaccidents,violations,suspensions,orpriorclaims.

B. Worker's Compensation InsuranceWorker’scompensationisprotectionmandatedbystatelawforaworkerandhisorherdependentsagainstinjuryanddeathoccurringinthecourseofemployment.Itisnothealthinsuranceandisnotintendedtocompensatefordisabilityotherthandisabilitycausedbyinjuryarisingoutofemployment.

Thepurposeoftheworker’scompensationsystemistoprovidefinancialandmedicalbenefitstovictimsof“work-related”injuriesandtheirfamilies,regardlessoffault.Thelawsplacethefinancialburdenontheemployerandultimatelytheconsumer.Thiscompensationisgenerallytheexclusiveremedyfortheinjuredemployee.

BENEFITS PAYABLE UNDER WORKER’S COMPENSATION INSURANCE

Worker’scompensationbenefitscanprovidetheurgentlyneededmedicalcareandtheneededfinancialsupportforfarmersandtheirfamilies.Basicbenefitsinclude:

• Coverage of all reasonable and necessary medical costs

• Benefitsfortemporarywageloss –TemporaryPartialDisability(TPD)orTemporaryTotalDisability(TTD) –Sustainedbyanemployeewhilerecoveringfromaninjury

Eligibilityfortemporarydisabilitybenefitsaredeterminedandmustbedocumentedbyadoctor.Benefitsfortemporarywagelossduetodisabilityarebasedontwo-thirdsoftheemployee’swagerateuptoaspecifiedmaximumamount.

• Benefitsforpermanentdisability –PermanentPartialDisability(PPD)orPermanentTotalDisability(PTD) –Iftheemployeedoesnotfullyrecoverfromtheinjury

Permanentdisabilityisawardedforthepotential,oractual,lossofearningcapacity.Theamountofbenefitpaymentforpermanentdisabilitydependsontheseriousnessofthepermanentdisability.


• Vocationalrehabilitationandretraining Forinformationonjobretrainingorplacement,callorwritetheWorker’sCompensationDivision.

• Deathbenefitsandburialexpenseuptospecificlimits

Formoreinformationonworker’scompensationinsurance, see contact information on page 20.

WisconsinlawrequiresasubjectemployerwithemployeesworkinginWisconsinmusthaveaworker’scompensationinsurancepolicywithaninsurancecompanylicensedtowriteworker’scompensationinsurance in Wisconsin.

Eachindividualemployermustprovideaworker’scompensationinsurancepolicyforitsemployees.Oneemployercannotprovideworker’scompensationinsurancecoverageforanotheremployer’semployeesevenwhereorwhetherornottheyvoluntarilysignacontracttoprovidethecoverage.Everyemployer,asdescribedins.102.04(1),Wis.Stat.,isrequiredunders.102.28(2),Wis.Stat.,tohaveaworker’scompensationinsurancepolicyinthenameoftheemployer/owner,orinthenameofthebusinessentity.

Wisconsin Worker’s Compensation Act (Act) (Sections 102.04 and 102.07, Wis. Stat.)MostWisconsinemployersarerequiredtohaveinsuranceorbelicensedself-insurersundertheAct.Thelawmandatescompensationinsurancefor:

1.Anyemployerwhousuallyemploysthreeormorepersonsfull-orpart-time.Thisemployerneedsinsuranceimmediately.

2.Anyemployerwhohasoneormorefull-timeorpart-timeemployeesandhaspaidgrosscombinedwagesof$500ormoreinanycalendarquarterforworkdoneinWisconsin.Thisemployermusthaveinsurancebythe10thdayorthefirstmonthofthenextcalendarquarter.

3.Anyoneengagedinfarmingwhoemployssixormoreemployees(atoneormorelocations)onthesamedayfor20days(consecutiveornonconsecutive)duringacalendaryear.AcalendaryearisJanuarythroughDecember.Thefarmermusthaveinsurancewithin10daysafterthe20thdayofemployment.Somerelativesofthefarmerarenotcountedasemployees.

AnemployersubjecttotheActmaynotwithholdorcollectanymoneyfromemployeesoranyotherperson,includingindependentcontractorsandsubcontractors,topayforworker’scompensationinsurance.Todosoisillegal.Also,noagreementbyanemployerwaivingrightstocompensationisvalid.[s.102.16(3)and102.16(5),Wis.Stat.]

Who is covered by the Act? Are there exceptions?NearlyallemployersinWisconsinarecovered.Thisincludesbothpublicandprivateemployers.Infact,whentalkingaboutworker’scompensation,itiseasiertodiscusstheexceptions.ThereareafewclassesofworkerswhoarecoveredbyfederallawsandarenotcoveredbytheAct.Employeesofthefederalgovernment(suchaspostalworkers,employeesataveteransadministrationhospital,ormembersofthearmedforces)arecoveredbyfederallaws.PeoplewhoworkoninterstaterailroadsarecoveredbytheFederalEmployersLiabilityAct.SeamenonnavigablewatersarecoveredbytheMerchantMarineActof1920,andpeopleloadingandunloadingvesselsarecoveredbytheLongshoremen’sandHarborWorker’sCompensation Act.

TheonlyemployeeexceptionstotheAct'sinsurancerequirementaredomesticservants,somefarmemployees,volunteers,includingvolunteersofnonprofitorganizationsthatreceivemoneyorotherthingsofvaluetotalingnotmorethan$10perweek,andreligioussectmembersthatqualifyandarecertifiedforanexemption.PleasecontacttheWorker’sCompensationDivision,BureauofInsuranceProgramsat(608)266-1340foradetailedexplanationoftheseexceptions.VirtuallyallotherworkersandemployersaresubjecttotheAct.


Are out-of-state employers who have employees working in Wisconsin required to have a worker’s compensation insurance policy in Wisconsin?Yes,out-of-stateemployerswithemployeesworkinginWisconsinmusthaveaworker’scompensationpolicywithaninsurancecompanylicensedtowriteworker’scompensationinsuranceinWisconsin.

Section102.28(2),Wis.Stat.,requiresanemployersubjecttotheActwithemployeesworkinginWisconsinmusthaveaworker’scompensationinsurancepolicywithaninsurancecompanylicensedtowriteworker’scompensationinsuranceinWisconsin.ThepolicymustbeendorsedtonameWisconsinasacoveredstatein section 3-A of the policy.

If an out-of-state employer has a worker’s compensation insurance policy with an insurance company not licensedtowriteinWisconsin,theymustobtainapolicyfromaWisconsin-licensedinsurancecompanytocovertheirWisconsinexposure.TheinsurancecompanymustfiletheproperlyendorsedpolicywiththeWisconsin Compensation Rating Bureau.

Formoreinformationonworker’scompensationinsurance,seecontactonpage20.

Must employers purchase worker’s compensation insurance?ThelawrequireseveryemployersubjecttotheActmustprovidesomewayofassuringitcanpaybenefitstoitsworkersshouldtheybecomeinjured.MostemployersinWisconsinprovidethissecuritybypurchasingan insurance policy from a private insurance company. The insurance company then reports to the State of Wisconsin,DepartmentofWorkforceDevelopment(DWD),thatitisprovidingcoveragefortheemployer.Someemployers,however,are“self-insured.”

What is self-insurance?Someemployerswhoarefinanciallysound(andusuallyquitelarge)are“self-insured.”Anemployercanonlybeself-insuredifitobtainspermissionfromDWD.

DWDrequiresemployerstodemonstrateaverysoundfinancialconditioninordertobeself-insured.

Where to Purchase Worker’s Compensation Insurance• OPEN MARKETPLACE Thereareabout300insurancecompanieslicensedtowriteworker’scompensationinsuranceinWisconsin. Contact a local agent to assist you in applying for insurance to the company of your choice. Ifaninsurancecompanyturnsdownyourapplicationforinsurance,youshouldaskyouragenttosearchthemarketplaceforanothercompany.InformationonlicensedinsurersisavailableonOCI’sWebsiteatoci.wi.gov.

•WISCONSIN WORKER’S COMPENSATION POOL Ifcoverageisnotavailableintheopenmarket,youragentshouldsubmitanapplicationtotheWisconsin Compensation Rating Bureau (Bureau). TheBureauactsasadministratorandtrusteeoftheWisconsinWorker’sCompensationPool(Pool).ThePoolisarisk-sharingplancreatedtoprovideworker’scompensationinsurancetoanyemployerwhoisunabletoobtaincoverageintheopenmarketandwhois,ingoodfaith,entitledtosuchinsurance.Out-of-stateemployerswithnoWisconsinoperationsandemployerswhoowethePoolmoniesfrompriorpoliciesarenoteligibleforcoveragefromthePool. Allinsurerslicensedtowriteworker’scompensationinsuranceinWisconsinmustparticipateinfundingthePoolandarerepresentedbyeightinsurancecompaniesthathavebeendesignatedasservicingcarriers.TheinsurancecompanyassignedtoserviceapolicyissuedthroughthePoolwritesthepolicyinitsown


nameandprovidesclaims,losscontrol,auditing,andotherservices,justastheywouldfortheirvoluntarilywrittenpolicyholders. The Bureau will assign an insurer to write the policy for you. The premium cost is generally the same for assignedcoverage.Yourinsuranceagentcanprovideyouwithfurtherinformationandforms.

FormoreinformationonthePool,contactyouragentor see contact information on pages 20–21.

Penalties for not Purchasing Worker’s Compensation InsuranceThereareseverepenaltiesforthefailureofanemployertoprovideworker’scompensationcoverage.First,ifaworkerisinjured,theemployerispersonallyliable.

Second,theWorker’sCompensationDivisionactivelyenforcestheAct.Ithastheauthoritytoclosedownanemployeruntilsuchtimeasproperworker’scompensationinsurancecoverageisobtained.

Bylaw,apenaltyisimposedonanemployerforfailingtohaveworker’scompensationinsurancecoveragewhererequired.Thenormalpenaltyistwicetheamountofpremiumnotpaidduringanuninsuredtimeperiodor$750,whicheverisgreater.Anemployerwhohasanillegallapseinworker’scompensationinsuranceofsevenconsecutivedaysorlesscanbesubjecttoapenaltyof$100foreachdaytheyareuninsuredprovided1)theemployerhasnotpreviouslybeenpenalizedfornothavingworker’scompensationinsurancecoverage.and2)noinjurythattheemployerisliableforunders.102.03,Wis.Stat.,occurredduringtheuninsuredperiod.Iftheillegallapseisgreaterthansevendays,thenormalpenaltyassessmentwill apply.

Inadditiontothepenalty,uninsuredemployersarepersonallyliableforbenefitsanddonothavethenormalexemptionsofpropertyfromseizureandsaleonexecutionofajudgment.Officersanddirectorsofuninsuredcorporationsarepersonallyliableforbenefitsowedbythecorporation.Otherpenaltiesmayapplydependinguponthesituation.[Sections102.82(2)(a),102.82(2)(ag),and102.28(5),Wis.Stat.]

Cost of InsuranceThecostofinsurancewillvarydependingonyourpayrollandthetypeofbusinessyouoperate.Employersareclassifiedforworker’scompensationinsurancepurposesbythepredominatebusinessoftheemployerandnotthespecificjob.

Forexample,inamanufacturingrisksituation,theproductmanufactureddeterminesthebusinessoftheinsuredemployer.Inotherwords,GeneralMotorswouldbeclassifiedasanautomobilemanufacturer.Therearemanydifferentkindsofjobsinvolvedinthemanufacturingofautomobiles,someofwhicharemorehazardousthanothers.Nonetheless,allofthesejobsarebeingperformedforanemployerengagedinthebusinessofmanufacturingautomobiles,andtherefore,alloftheemployees’payrollswouldbeclassifiedinthesameclassification.

Premium Rate DeterminationThe Bureau sets the premium rate for each class with the approval of the Commissioner of Insurance. If youfeelyourbusinessisnotproperlyclassifiedorthepremiumchargedisnotproper,youcanappealtotheBureauforreviewofyoursituation.IfyouarestillnotsatisfiedwiththeBureau’sdecision,youmaysendawrittenrequesttotheCommissionerofInsuranceforahearingtoreviewtheBureau’sdecision.[Section626.31,Wis.Stat.]


ClassificationSysteminWorker’sCompensationInsuranceTheobjectoftheworker’scompensationsystemistogroupsimilaremployerssoeachclassificationreflectscommonlosses.Sincelossesvarywidelybybusinessorindustryofemployers,chargingthestatewideaveragerateswouldresultinsomeemployerspayingtoohighapremium,whileemployersinotherbusinessesorindustrieswouldpaylessthantheirfairshare.

Accordingly,employersareclassifiedbythebusinessorindustryinwhichtheyoperatetoreflectthisvariationinlosscosts.Generally,similarbusinesseshavesimilarexposurestooccupationalinjuryanddisease,eventhoughnotwobusinessesareidentical.

Eachclassificationcombinesthepayrollandlossesofsimilaremployerstodevelopapricefortheinsuranceprotection.Worker’scompensationinsuranceusesapproximately600separatebusinessclassificationsforpremium purposes.

Threeoccupationsarecommontosomanybusinessesthatspecialclassificationshavebeenestablishedforthem.These“standardexception”classificationscoverclericalofficeemployees,outsidesalespeople,anddrivers.Thestandardexceptionclassesaretheonlyclassificationsthatarenotrelatedtothebusinessoftheemployer.Instead,theyarerelatedtothejobasthesejobsarefairlycommontoallemployers.

The Experience Rating PlanTheExperienceRatingPlanoffersamethodformodifyingthecostofinsuranceforallbutthesmalleremployerstomatchthecharacteristicsofanindividualemployer.Experienceratinggroupsallinsuredsaccordingtotheirbusinessoperationsorclassification,addstogetherthelossesofthegroups,andobtainsan average cost for the groups.

Inworker’scompensation,experienceratingtheactuallossesoftheindividualemployeraredeterminedoveraperiodoftime,usuallythreeyears.Thelossesarecapped,whichmakesthefrequency—notseverity—oflossesmoreimportantfordeterminingexperiencerates.Thisexperienceisthencomparedorcontrastedwiththeaverageasreflectedbytherateorratesthatapplytotheemployer’sbusiness.Iftheemployerhasbetterthanaveragecosts,theemployerisawardedacredit,whilepoorerthanaverageexperiencecarriesadebitrating.Experienceratingtakesaveragelossexperience(rates)andmodifiesitbytheindividualemployer’sownlossexperience.

Legal Protections in the Event of BankruptcyTherearetwoprovisionsinthelawtoprotectworkersintheeventofbankruptcies:

• SELF-INSURERS’SECURITYFUND TheSelf-Insurers’SecurityFundisfundedbyassessmentsonotherself-insuredemployers.Shouldaself-insuredemployergobankrupt,theSelf-Insurers’SecurityFundhastheresponsibilityformakingpaymentstoinjuredworkers.Shouldthisoccur,itisveryimportanttheinjuredworkergivenoticeoftheirclaimtotheSelf-Insurers’SecurityFundimmediately.Thereisalsoaguarantyfundwhichassumesresponsibilityifaninsurancecarrierbecomesbankrupt.

• WISCONSININSURANCESECURITYFUND Everystatehasasafetynettoprotectinsuranceconsumersfromfinanciallossintherareinstanceacompanybecomesinsolvent.Thissafetynetiscalleda“guarantyfund.”Theguarantyfundsareestablishedbystatelawandarecomposedoflicensedcompaniesinthestate.Theypaytheclaimsofpolicyholdersandotherclaimantsofaninsolventinsurancecompany.Themoneytopaytheclaimsagainsttheinsurancecompanycomesfromassessmentsmadeagainstalloftheinsurancecompaniesthataremembersoftheguarantyfund.

InWisconsin,thefundiscalledtheWisconsinInsuranceSecurityFund(Fund).TheFundiscreatedbystatelawandisfundedbyassessmentsofinsurerslicensedtodobusinessinWisconsin.Ingeneral,theFund


protectsresidentsformostclaimsoflicensedinsurersinliquidation.TheFundshouldnotbereliedupontoeliminateallrisksoflosstoinsuredsduetoinsurerinsolvency.Sometypesofpoliciesmaynotbefullycoveredandsignificantdelayscouldoccurinsettlingobligationsincasesofliquidation.

QuestionsaboutthecoverageandlimitationsoftheFundmaybeaddressedto:

Wisconsin Insurance Security Fund 2820WaltonCommonsLane,Suite135

Madison,WI53718-6797 (608) 242-9473

www.wilifega.org

Where can I get more information about coverage under the Act?Contact the Worker’s Compensation Division of the Department of Workforce Development (DWD) for more informationregardingtheWorker’sCompensationAct.TheWorker’sCompensationDivisioncanbereachedbyphoneat(608)266-1340.Informationisalsoavailableonlineatdwd.wisconsin.gov/wc.

TheWorker’sCompensationActisavailableonlineathttps://dwd.wisconsin.gov/dwd/publications/wc/wkc_1_p.pdf.PrintedcopiescanalsobepurchasedthroughDocumentSalesatdocsales.wi.gov. Contact DocumentSalesat(800)362-7253formoreinformationaboutorderingthispublication.

Additional Resources

Worker’s Compensation Division of the Department of Workforce Development (DWD) dwd.wisconsin.gov/wc

• All questions relating to the Wisconsin Worker’s Compensation Act

• Allinjury/claimquestions• Compliance questions• Corporateofficeroptionsquestions• Enforcement questions• Penaltyandpenaltypaymentplanquestions• Self-insurance questions• Dividedinsurancequestions• Wrap-up policy questions• Withdrawalquestions

MadisonAreaOffice:201EastWashingtonAvenue,Room C100P.O. Box 7901Madison,WI53707-7901(608) 266-1340 Phone(608) 267-0394 Fax

MilwaukeeAreaOffice:StateOfficeBuilding,Room330819NorthSixthStreetMilwaukee,WI53203-1606(414) 227-4381 Phone(414) 227-4012 Fax

AppletonAreaOffice:54ParkPlace,Suite900Appleton,WI54913-8200(920) 832-5450 Phone(920) 832-5355 Fax

http://www.wilifega.org/

https://dwd.wisconsin.gov/wc/

https://dwd.wisconsin.gov/dwd/publications/wc/wkc_1_p.pdf

https://dwd.wisconsin.gov/dwd/publications/wc/wkc_1_p.pdf

https://docsales.wi.gov/

https://dwd.wisconsin.gov/wc/


Wisconsin Compensation Rating Bureau (WCRB)www.wcrb.org

• Wisconsin Worker’s Compensation Insurance Pool questions

• Rate questions• Inspection questions• Auditquestions• Premium charging questions• Classificationquestions• Experiencemodificationquestions• Allquestionsregardingtheproper filingofpoliciesandendorsements pertaining to Wisconsin coverage

• Insurancecompanyfilingquestions• Endorsementfilingquestions• Questionsregardingappealrights ofaWCRBdecision

• Questionsaboutstatisticalreporting

20700SwensonDrive,Suite100P. O. Box 3080Milwaukee,WI53201-3080(262) 796-4540 (Phone)(262) 796-4400 (Fax)

OfficeoftheCommissionerofInsurance(OCI)oci.wi.gov

• All questions relating to insurance laws• Questionsrelatedtothelicensingandregulationof

insurance companies• Unfair claim settlement practices questions• Unfair marketing practices questions• Worker’s compensation rate regulation questions• Worker’scompensationdividendplansquestions• QuestionsrelatedtothelicensingandregulationofWCRB

125SouthWebsterStreetP. O. Box 7873Madison,WI53707-78731-800-236-8517 (Phone)(608) 264-8115 (Fax)

III. Insuring Your Home BusinessIfyouoperateahomebusinessfull-orpart-time,youmightbeuninsuredandnotrealizeit.Manyhomebusinessownersbelievetheirhomeowner’sinsurancepolicycoversalltheirhomebusinessneeds.You should not assume your homeowner’s insurance policy will cover your home business. Your homeowner’s policy may providecoveragebutprobablyonlytoamaximumof$2,500forbusinessequipmentinthehomeand$250awayfrom the premises.

Yourhomeowner’spolicyusuallydoesnotcoverbusiness-relatedliability,forexample,ifacustomerorsupplierisinjuredonyourproperty.Ahomeowner’spolicyalsodoesnotinsureyourinabilitytocollectyouraccountsreceivableifyourbusinessrecordsaredamaged,andyourpolicywillnotreplacelostincomeifyoucannotoperateyourbusinessduetodamagetoyourhome.

Therearethreewaysyoucanbuyhomebusinesscoverage:

• Dependingonyourhomebusiness,youmaybeabletoaddanendorsementtoyourexistinghomeowner’sinsurancepolicy.Forexample,someinsurersofferahomedaycareendorsementforpeoplewhooperateahomedaycareserviceforpayintheirhome.

• Youmayalsobeabletobuyseveralindividualbusinessinsurancepoliciestoprovidethevariouscoveragesyouneed,suchasbusinessproperty,generalliability,andbusinessincomecoverage.

https://www.wcrb.org/



• Someinsurancecompanieshavebeguntoofferwhatamountstoamini-businessowner'spackagepolicyspecificallyforhomebusinesses.Someofthesepoliciescoverthelossordestructionofbusinesspropertyonoroffpremises,thelossofvaluablepapersandimportantbusinessinformation,personalinjuryandadvertisingliability,accountsreceivableupto$10,000,andmoneylostonpremisesupto$5,000andoffpremisesupto$2,000.

Thecompaniesthatofferthesepoliciesoftenrequireyoutopurchaseyourhomeowner'sandautoinsurancepoliciesfromthem.Withthesepoliciesinplace,yourhomebusinesspolicyextendstoyourbusinesstheamountofpersonalpropertyandliabilitycoverageyouhaveonyourhome.Ifafireorstormmakesrunningyourbusinessimpossible,yourinsurancewillcoverexpensesandlostincomeforuptoayear.

Discussyourhomebusinessinsuranceneedswithyouragenttobuythepolicythatbestfitsyourneeds.

IV. Umbrella Liability InsuranceUmbrellapoliciescoverallunderlyingliabilitypolicies.Umbrellapoliciesaredesignedtocoverlarge,infrequentlosses,forexample,thetotalcostofclaimsthatmayresultfromacollisionwithaschoolbus.Todecidewhetheryouneedanumbrellapolicy,thinkofthemostextremesituations.Forinstance,imaginearoofcavinginundertheweightofaonce-in-a-100-yearsnowstormandthetotalcostoftheclaimsproducedifthereweremanypeopleinthevicinity.Thencomparetheamountwiththelimitsofyourcurrentliabilitypolicies.

Umbrellaliabilityinsuranceprovidestwokindsofcoverage:

• Paymentsofliabilitiesinexcessofthepolicylimitsforaninsured’sbasiccommercialgeneralliabilityoremployers’liabilitycoverage

• Liabilityforareasnotcoveredinotherliabilitypolicies

Anumbrellapolicyoffersyouextraliabilityinsurancethatpaysforalosswhenthelimitsofyourunderlyingpolicyarereached.Forexample,ifyouarefoundliableforsomeone’sinjurythatrequired$150,000ofmedicaltreatmentandtheliabilitylimitinyourunderlyingpolicyis$100,000,yourumbrellapolicywillpaytheadditional$50,000.Also,therearesomesituationsastandardpolicydoesnotcover,suchaslibelandslander.Anumbrellaliabilitypolicyenablespeopletoprotectthemselvesagainstcatastrophiclawsuitsinsuchsituations.

Umbrellapoliciesaresoldwithavarietyoflimits,commonly$1millionor$5million.Theunderlyingpoliciesprovidethefirstdollarsinaliabilityclaimandtheumbrellaisavailabletoanyremainingamountsuntiltheamountpaidbyallpoliciesreachestheumbrellalimit.

Umbrellaliabilitypolicycoverageusuallyprotectspolicyholderswherevertheytravel.Manysuchpolicieswillcoverlegaldefensecostsevenifthechargesareprovedbaseless.Umbrellaliabilitycoveragehascometobeinhighdemandamongindividualswhohavesubstantialassetsandwhomaybeespeciallyvulnerabletolawsuitsandcostlyjudgments.

Keepinmindmostpersonalumbrellapoliciesaddedtoahomeowner’sorpersonalautoinsurancepolicywillcoverliabilitystemmingfrombusinessactivitiesandbusinesspropertyonlyifcoveredbythebasicpolicies.Alwayscheckyourpolicytoseehowitdefinesbusinessandbusinesspropertyoraskyouragent.

V. Risk Management/Loss Control MeasuresYoumaybeabletoreduceyourpremiumthroughriskmanagement.Riskmanagementinvolvesidentifyingandanalyzingwaysinwhichyoumaybefoundliable(your“exposuretoliability”)andselectingandimplementingtechniquestobeusedtohandletheexposure.Youcantakestepstoreducethepossibilityofunforeseenlossesandtheimpactofthosethatdooccur,whetherfromfires,storms,thefts,lawsuits,orinjuries.

Youcan:

• Conductsafetyinspectionsandprogramsfortrainingemployeesinfirst-aidmethods.

• Installasprinklersystemandanalarmthatautomaticallynotifiesfirefightersofafire.Thismaymakelosseslesslikelyorinjurieslesssevere.


• Makesurethewiringinyourbuildingisingoodshape.

• Trainworkerstoliftheavyitemsproperlyandtowearsafetymasksandgloveswhenworkingwithhazardoussubstances.

• Keeponlyasmallamountofcashinthecashregisteranddeposittherestinafloorsafethatcannotbeopenedbyemployees.

• Storeinventoryintwolocationssoifthereisalossalltheinventorywillnotbedestroyed.

• Ifyouleaseoutpartofyourpremises,youmightrequireyourtenanttoprotectyoufromliabilityclaimsofpeopletheyallowinthebuilding.

• Makesureallyourdrivershavegooddrivingrecords.Thecauseofmostaccidentsisthedriver.Youshouldalwayscheckthedrivingrecordsofanyemployeeswhowilldriveoncompanybusinessandneverallowapersonwithapoordrivinghistorytodrive.

Thislistisfarfromcomplete.Askyouragentorinsurancecompanyiftheyhavebrochuresorpublicationsonlosscontrol topics.

Impact of Implementing Loss Control MeasuresImplementinglosscontrolmeasuresmaymakeitlesslikelyyouwillbefoundliableor,ifyouarefoundliable,thatdamagewillbelarge.Becausepremiumsarebasedonhowmuchinsurerspayoutinclaims,anincreaseinclaimcosts also means an increase in your premiums.

Businesseswithverygoodlosscontrolmeasuresandclaimshistorieswilloftenpaylowerinsurancepremiumsthanthosewithlesseffectivelosscontrolmeasuresandpractices.Abusinesswithareallypoorlosscontrolhistorymayalsohavedifficultyfindingpropertyinsurance.

Talktoyouragentaboutwhichriskmanagementtechniquesyoucanusethatmayreduceyourpremiums.

VI. Filing a ClaimA. How to File a Property Damage Claim

Ifyourbusinessishitbyafire,accident,ortheft,yourinsurancepolicyliststhestepsyoumusttake.Thefollowing tips will make it easier for you to go through the claims process.

1. Whenafire,accident,ortheftoccurs,callyouragentorinsurancecompanyatonce.Reportanyburglaryorthefttothepolice.

2. Takereasonablestepstoprotectyourpropertyfromfurtherdamage.

3. Ifyouneedimmediaterepairs,savethedamagedparts.Theclaimsadjustermaybeinterestedinexaminingthem.Ifsavingthemisnotpractical,calltheclaimsmanageratyourinsurancecompany.

4. Getatleasttwobidsforrepairs.Thiswillspeedtheprocessingofyourclaim.Getestimatesonthecosttorepairorreplacethedamagedproperty.Bidsshouldinclude:

• alistofpartsthathavetobereplacedandthereasonforreplacingthem.

• straighttimelaborcosts.

• overtimelaborcosts.Donotforgettoincludeanycostsyouoryouremployeesincurwhilerepairsarebeingmade.

5. Ifyouarefilingabusinessinterruptionclaim,youwillhavetoshowhowmuchbusinessyouconducted,bothbeforeandaftertheloss.Keepdetailedrecordsofbusinessactivityandextraexpensesduringtheinterruptionperiod.Keepcurrentcopiesoftheserecordsoffthebusinesspremisessotheywillnotbedestroyedbyfire.Doeverythingyoucantominimizetheamountofloss.

6. Ifyouneedhelp,callyouragentoryourinsurancecompany’sclaimsmanager.


B. How to File a Liability Insurance ClaimBusinessownershaveacontractualobligationtoinformtheinsurancecompanyoragentassoonastheybecomeawarethereisorcouldbealiabilityclaim.Theinsurancepolicycontainsa“reportingclause”thatspecifiesthetimeaninsuredhastofileaclaim.Withastandardgeneralliabilityinsurancepolicy,itisrecommendedaclaimbereportedassoonasyouknowofaloss.

Youshouldreportallliabilityclaimstotheinsurancecompanyassoonaspossible.Yourreportshouldinclude:

• Thedetailsofhow,when,andwheretheaccidenttookplace.

• Thenamesandaddressesofanyinjuredpersonsandwitnesses.

• Allcopiesofanydemands,notices,summonses,orlegalpapersreceivedinconnectionwiththeclaim or suit.

• Anauthorizationfortheinsurancecompanytoobtainrecordsandotherinformation.

Yourpolicyrequiresyoutocooperatewiththeinsurancecompanyintheinvestigation,settlement,ordefenseoftheclaimorsuit.

Unlessallofthetermssetoutinthepolicyhavebeenfullycompliedwith,itmaymakeitdifficulttocollectfrom the insurance company.

C. How to File Your Motor Vehicle ClaimIfyourcompanycarortruckisinvolvedinanaccident,damagedbyfire,floodorvandalism,orstolen,followthesestepsinfilingaclaim.

• Callyouragentorinsurerassoonaspossible.Askwhatformsordocumentswillbeneededtosupportyourclaim.Yourinsurermayrequirea“proofofloss”form,aswellasdocumentsrelatingtoyourclaim.Thesemayincludemedicalandrepairbills,andacopyofthepolicereport.

• Supplytheinformationyourinsurerneeds.Cooperatewiththeinvestigation,settlement,ordefenseofanyclaim,andprovidecopiesofanylegalpapersyoureceiveinconnectionwithyourloss.Yourinsurerwillrepresentyouifaclaimisbroughtagainstyou,anddefendyouifyouaresuedforaclaimcoveredbythepolicy.

• Keeprecordsofexpensesyoumayincurasaresultoftheaccident.Youmaybereimbursedforthembecauseofyourpolicy.Iftheaccidentoccurswhileemployeesareconductinginsurer-relatedbusinessactivities,yourworker’scompensationpolicywillcovertheworkers’medicalexpensesandlossofincome.

• Keepcopiesofallpaperworkforyourownfiles.Youmayneedthemlater.

VII. Flood InsuranceIfyourbusinessislocatedonafloodplain,youwillneedtopurchasefloodinsurance.FloodinsuranceisavailablethroughtheNationalFloodInsuranceProgram(NFIP).ToqualifyfortheNFIP,youmustliveinadesignatedcommunityandcomplywiththegovernmentguidelinesforfloodprevention.MostareasinWisconsinqualify.Youragentshouldbeabletofindoutifyouareeligible.

Forgeneralinformationonthefloodinsuranceprogram,youmaycallorwrite:

Federal Emergency Management Agency (FEMA) 500 C Street SW

Washington,DC20472 1-800-621-FEMA

1-800-462-7585 TTY www.floodsmart.gov

https://www.floodsmart.gov/


VIII. Health InsuranceWisconsininsurancelawdefinesasmallemployerasanemployerwithatleast2butnotmorethan50employees.Smallemployerscanchoosewhethertoofferorprovidehealthinsurancetotheiremployees.However,ifyoudecidetooffergrouphealthinsurancetoyouremployees,youmustofferthecoveragetoallemployeesworking30ormorehoursandtotheirdependents.Yourinsuranceagentorbrokercanadviseandassistyouoncoverageoptionsandtheircost.

A. Types of CoverageGroup Health InsuranceGrouphealthinsuranceprovidescoveragetoindividualsunderasinglemasterpolicyissuedtothegrouppolicyowner.Certificatesofinsuranceareprovidedtotheindividuals.Thepolicyownermaybeanemployer,anassociation,alaborunion,orotherentity.Insurersmayrequireminimumemployeeormemberparticipationlevelsinordertoassuretherearesufficientindividualsinthegroupingoodhealthtobalancethose in the group in poor health.

Grouphealthinsuranceprovidesseveraladvantages:

• Thepremiumisoftenpartlypaidbyanemployerorunion.

• Groupmembersareautomaticallyeligibleforthecoverage.

• Grouppremiumsaretypicallylowerthanthoseforcomparableindividualpolicycoverage.

Individual Health InsuranceIndividualhealthinsuranceprovidescoveragetoaspecificindividualortoanindividualandhis/herfamilyunderapolicyissuedtothatindividual.Mostindividualhealthinsurancepoliciesincludeexclusionsforwork-relatedinjuriesregardlessofwhetheryouareself-employedandevenifyoudonothaveworker'scompensation coverage.

Findingadequatecoverageatanaffordablepricewilltakesomeeffort.Startwithaknowledgeablehealthinsuranceagentwhowillprovidereliableservice.Trytogetarecommendationfromfamilyorfriends.

B. Affordable Care ActThefederalAffordableCareAct(ACA)includesanumberofmarketreformsthatapplytoindividualsandsmallemployerswhoapplyforhealthinsurance.Itallowsindividualsandsmallemployerstopurchasehealthinsurancefromanyinsurerofferingcoverageinthemarketregardlessofthehealthstatusofindividuals,employees,ordependents.ACAprovidesthatindividuals,employees,andtheirdependentsmaynotbesubjecttopreexistingconditionexclusions.Italsoprovidesthathealthinsuranceratesmayonlydifferbasedonemployeeage,compositionoffamily,geographicarea,andtobaccouse.

Smallemployerswithfewerthan25full-timeequivalentemployeesandpayingaverageannualwagesofbelow$50,000mayqualifyforasmallbusinesstaxcredittooffsetsomeofthecostsofhealthinsurancepremiums.Theamountofthetaxcreditisbasedonthesizeoftheemployer’sbusiness.Thefeweremployeesanemployerhas,thelargerthetaxcredittheemployermaybeeligiblefor.

EssentialHealthBenefitsAllACA-compliantcomprehensiveindividualandsmallgrouphealthinsurancepoliciesmustincludeasetofhealthcareservicescalledessentialhealthbenefits.Thesebenefitsinclude:

• Ambulatorypatientservices

• Emergency services

• Hospitalization

• Maternityandnewborncare


• Mentalhealthandsubstanceusedisorderservices,includingbehavioralhealthtreatment

• Prescriptiondrugs

• Rehabilitativeandhabilitativeservicesanddevices

• Laboratoryservices

• Preventiveandwellnessservicesandchronicdiseasemanagement

• Pediatricservices,includingoralandvisioncare

Inadditiontohealthcareservicesinthesecategories,allofWisconsin’smandatedbenefitsareconsideredessentialhealthbenefitsandmustbecoveredbyACA-compliantcomprehensiveindividualandsmallgrouphealthinsurancepolicies.InformationonWisconsinmandatedbenefitsisavailableintheOCIpublicationFact Sheet on Mandated Benefits in Health Insurance Policies.

Essentialhealthbenefitsmustbecoveredwithnoannualorlifetimedollarlimits.

Open EnrollmentACAprovidesforanannualopenenrollmentperiod.Forthe2018coverageyear,theopenenrollmentperiodranfromNovember1,2017,throughDecember15,2017.Inaddition,ACAprovidesforspecialenrollmentperiodsifyouexperiencecertainlifeevents,includinglosinghealthcoverage,moving,gettingmarried,havingababy,oradoptingachild.

SmallemployerhealthinsuranceisavailableinWisconsinfromseveralinsurersanddefinednetworkplans.OCIoffersapublicationmeanttohelpsmallemployersunderstandtheiroptionsandtoprovideacomparisonofpremiumratesavailableinthesmallemployerhealthinsurancemarketplace.ReadhteHealth Insurance for Small Employers and Their EmployeesavailableonOCI’sWebsiteorcall1-800-236-8517torequest a copy.

IX. Choosing a PlanChoosingahealthinsuranceplanislikemakinganyothermajorpurchase.Youchoosetheplanthatmeetsbothyourneedsandyourbudget.Formostpeople,thismeansdecidingwhichplanisworththecost.Plansdiffer,bothinhowmuchyouhavetopayandhoweasyitistogettheservicesyouneed.

Healthinsuranceplansareusuallydescribedasafee-for-servicehealthplanoradefinednetworkhealthplan.AdefinednetworkplanisthetermusedinWisconsininsurancelawtorefertoanyhealthbenefitplanthatcreatesincentivesforitsenrolleestousenetworkproviders.Afee-for-servicehealthplanallowsyoutouseanydoctor,hospital,orotherprovideryouchoose.Althoughtheseplansofferthegreatestfreedomtoselectanydoctor,theyareusuallymoreexpensivethanplansthatlimitchoices.Definednetworkhealthplansusuallycostyouless,butyouhavelessfreedomofchoice.

Costisnottheonlythingtoconsiderwhenbuyinghealthinsurance.Youalsoneedtoconsiderwhatbenefitsarecovered.Youneedtocompareplanscarefullyforbothcostandcoverage.

Whilefee-for-serviceanddefinednetworkplansdifferinimportantways,insomewaystheyaresimilar.Bothcoveranarrayofmedical,surgical,andhospitalexpenses.Mostoffersomecoverageforprescriptiondrugs,andsomeincludecoveragefordentistsandotherproviders.Buttherearemanyimportantdifferencesthatwillmakeone or the other form of coverage the right one for you.

A. Fee-for-Service Health PlanUnderafee-for-servicehealthplan(alsoknownasindemnityplan),youarefreetoseeknecessarymedicalcarefromanydoctorandhospitalyouwish.Thedoctoroftenbillstheinsurancecompanydirectlyfortheservicesprovided,andtheinsurancecompanypaysfortheitemscoveredbythepolicy.Insomecasesyouwillhavetofilloutclaimformsandsendthemtotheinsurancecompany.Thistypeofhealthplanoffersthemostchoicesofdoctorsandhospitals.

https://oci.wi.gov/documents/consumers/pi-019.pdf

https://oci.wi.gov/Documents/Consumers/PI-206.pdf



B. Defined Network Health PlanSomedefinednetworkplanswillprovidecoverageonlyiftheenrolleeusesnetworkprovidersandotherplanswillpayalargerportionofthechargesiftheenrolleeusesnetworkproviders.Healthmaintenanceorganizations,point-of-serviceplansandpreferredproviderplansareexamplesofdefinednetworkplans.Thistypeofplanissometimesreferredtoasamanagedcareplan.

Health Maintenance Organization (HMO)AnHMOisahealthinsuranceplanthatprovidescomprehensive,prepaidmedicalcare.Itdiffersfromatraditionalinsurerinthatitbothpaysforandprovidesthemedicalcare.PersonsinsuredbyanHMOplanarereferredtoasenrollees.AnHMOusuallyoperatesonaclosed-panelbasis.ThismeansenrolleesarerequiredtoseekcarefromamedicalproviderwhoiseitheremployedbyorundercontracttotheHMO.

HMOslimitcaretoaspecificgeographicarea.Exceptforseriousemergenciesoutsidetheservicearea,theHMOwillprobablynotpayforcareenrolleesreceivefromaproviderwhoisnotaffiliatedwiththeHMOunlesstheHMOphysicianrefersyoutothatprovider.

Point-of-Service Plan (POS)APOSplanisessentiallyanHMOthatallowsmemberstouseservicesprovidedoutsideofthenetworkwithoutpriorapprovalfromanetworkdoctor.POSplansofferlowerdeductiblesandcoinsuranceforvisitstodoctorsinsidethenetwork.Visitsoutsidethenetworknormallyrequirethepaymentofdeductiblesandcoinsurance.

Preferred Provider Plan (PPP)APPPisaformofmanagedcareclosesttoanindemnityplan.APPPhasarrangementswithdoctors,hospitals,andotherprovidersofcarewhohaveagreedtoacceptlowerfeesfromtheinsurerfortheirservices.APPPpaysaspecificlevelofbenefitsifcertainprovidersareusedandalesseramountifnon-PPPprovidersareutilized.APPPmustprovidereasonableaccesstonetworkprovidersintheservicearea.However,aPPPisnotrequiredtoofferachoiceofparticipatingprovidersineachgeographicarea.

PPPsmayrequireenrolleestopaycoinsuranceofupto50%forservicesprovidedbynonparticipatingproviders.Enrolleesshouldreadtheirpoliciescarefullybeforeseekingservicesfromnonparticipatingproviders.

APPPoperatesinacertaingeographicarea,islimitedtospecificproviders,andisregulatedbyOCI.APPPthathasaprovideragreementwithahospitalmaynothaveanagreementwitheveryproviderwhoprovidesservicesatthehospital,suchasanesthesiologists,pathologists,andradiologists.

Manyinsurersthatofferstandardhealthinsurancepoliciesalsooffersometypeofpreferredproviderplan.Youshouldaskyouragenttoprovideyouwithinformationonpreferredproviderplansinyourarea.

C. Features Included in Most Health PlansDeductibleThedeductibleisthedollaramountyoumustpayeachyearbeforetheinsurancecompanypaysitsshare.Ifyouarebuyingcoverageforyourfamily,askhowthefamilyplanworks.Familyplansmayhavefamilyandindividualdeductiblesthatneedtobepaidbeforethehealthplanpaystowardsyourfamily’smedicalexpenses.

Readthepolicycarefully.Somepoliciesrequireyoutopayadeductibleonacalendaryearbasisoronapersicknessorinjurybasis.


CoinsuranceCoinsuranceisyourshareorthepercentageofcoveredexpensesyoumustpayinadditiontothedeductible.Coinsuranceappliestoeachpersonandstartsoveragaineachyear.Sometimesthepolicywillcoverallexpensesafteranout-of-pocketlimitisreached.

CopaymentAcopaymentisyourshareorafixedamountyoumustpayforcoveredexpensesinadditiontothedeductible.Theamountcanvarybythetypeofcoveredmedicalexpense.

Out-of-Pocket LimitManyplanshaveanout-of-pocketlimit.Theout-of-pocketlimitisthemaximumdollaramountyoupayforcoveredservicesandsuppliesduringaspecifiedperiod—generallyacalendaryear.Chargesforservicesbynon-networkprovidersnotpaidbyaninsurerdonotcounttowardtheout-of-pocketlimit.Mostsmallgroupplansdefinedeductibles,coinsurance,andcopaymentsaspartofout-of-pocketmaximums.Oncetheout-of-pocketmaximumispaid,benefitsarepaidat100%ofthecoveredcostsincurredafterthattime.

Medically NecessaryEvery health insurance policy contains a provision that allows insurance companies to evaluate whether a serviceortreatmentis“medicallynecessary”intreatingapatientandwhetheritcouldadverselyaffectthepatient’sconditionifitwereomitted.Insurancecompaniesmaydenypaymentforatreatmentnotmedicallynecessary.Mosthealthbenefitplansoftenrequireareviewbeforecertainmedicalproceduresaredone.

Usual, Customary, and Reasonable ChargeMostinsurancecompaniesdonotuseyouractualbillstocalculatetheirpayments.Companieshavetheirownfeeschedule,suchasausual,customary,andreasonable(UCR)feeschedule.TheUCRfeesaretypicalamountspaidforeverythingfromadoctor’svisittoheartsurgery.

Forexample,ifyourdoctorcharges$10,000foranoperationwhilemostdoctorsinyourareachargeonly$8,000,youmaybebilledforthe$2,000difference.Thisisinadditiontothedeductibleandcoinsuranceyouwouldbeexpectedtopay.Toavoidthisadditionalcost,askyourdoctortoacceptyourinsurancecompany’spaymentasfullpayment,orshoparoundtofindadoctorwhowill.Otherwise,youwillhavetopaythedifference.

Exclusions and LimitationsTherearesomeservicesplanswillnotcover—usuallybecausetheyarenotconsideredmedicallynecessary.Inaddition,someservicesmaybelimited.Youshouldrevieweachplan’sexclusionsandlimitations.Keepinmindthatyouhavetopaythefullcostofcarenotcovered.

D. Requirements Applicable to All Health Benefit PlansEmergency CareEveryhealthcareplanofferedinWisconsinthatcoversemergencycare,includingdefinednetworkplans,mustcoverservicesrequiredtostabilizeaconditionmostpeoplewouldconsidertobeanemergency,withoutpriorauthorization.Definednetworkplansarepermittedtochargeareasonablecopaymentorcoinsuranceforthisbenefit.

Grievance ProcedureAllhealthinsuranceplansarerequiredtohaveaninternalgrievanceprocedureforyoutouseifyouarenotsatisfiedwiththeserviceyoureceive.Theproceduremustbesetforthintheinsurancecontractandmustalsobeprovidedinwrittennotice.


Thehealthinsuranceplanmustprovideyouwithcompleteandunderstandableinformationabouthowtousethegrievanceprocedure.Youalsohavetherighttoappearinpersonbeforethegrievancecommitteeandpresentadditionalinformation.

Youmaywishtofirstcontactthehealthinsuranceplanwithaquestionorcomplaint.Manycomplaintscanberesolvedquicklyandrequirenofurtheraction.However,filingacomplaintwiththeplanfirstisnotrequired.Youcanfileacomplaintwiththeappropriatestateagencyinsteadof,before,oratthesametimeasfilingwiththehealthinsuranceplan.

Healthinsuranceplansarerequiredtohaveaseparateexpeditedgrievanceprocedureforsituationswherethemedicalconditionrequiresimmediatemedicalattention.Theprocedurerequireshealthinsuranceplanstoresolveanexpeditedgrievancewithin72hoursafterreceivingthegrievance.

ManagedcareplansarerequiredtofileareportwithOCIlistingthenumberofgrievancestheyhadinthepreviousyear.AsummaryofthisinformationforHMOsisincludedintheConsumer’s Guide to Managed Care Plans in Wisconsin availableonOCI’sWebsite,orcallOCIat1-800-236-8517andrequestacopy.

Independent ReviewAllinsurancecompaniesofferinghealthbenefitplansinWisconsinarerequiredtohaveaninternalgrievanceprocesstoresolveanycomplaintyoumayhavewiththeplan.Ifyouarenotsatisfiedwiththeoutcomeofthegrievance,youhaveanadditionalwaytoresolvesomedisputesinvolvingmedicaldecisions.YouoryourauthorizedrepresentativemayrequestanIndependentReviewOrganization(IRO)reviewyourhealthplan’sdecision.

Theindependentreviewprocessprovidesyouwithanopportunitytohavemedicalprofessionalswhohavenoconnectiontoyourhealthplanreviewyourdispute.TheIROassignsyourdisputetoaclinicalpeerreviewerwhoisanexpertinthetreatmentofyourmedicalcondition.TheIROhastheauthoritytodeterminewhetherthetreatmentshouldbecoveredbyyourhealthplan.

Yourhealthplanshouldprovideyouwithinformationonyourrighttorequestanindependentreviewinitswrittenmaterialsandwithitsfinalwrittendecisiononyourgrievance.Youcanalsocallthehealthplanatitstoll-freenumberandrequestinformationonindependentreview.

Formoreinformationontheindependentreviewprocess,theFact Sheet on the Independent Review Process in WisconsinisavailableonOCI’sWebsite,orcallOCIat1-800-236-8517andrequestacopy.

MandatedBenefitsHealthinsurancepoliciessoldinWisconsinofteninclude“mandatedbenefits.”Thesearebenefitsaninsurermustincludeincertaintypesofhealthinsurancepolicies.ExceptforHMOsorganizedascooperativesunderch.185,Wis.Stat.,HMOsarerequiredtoprovidethesamebenefitsastraditionalinsurers.

InformationaboutWisconsinmandatedbenefitsisavailableintheFact Sheet on Mandated Benefits in Health Insurance Policies availableonOCI'sWebsite,orcall1-800-236-8517torequestacopy.

E. Other Insurance ProgramsBadgerCare PlusBadgerCarePlusisahealthcarecoverageprogramforlow-incomeWisconsinresidents.Children,pregnantwomenandadultsmayapply.BecauseBadgerCarePlusdoesnothaveanopenenrollmentperiod,youmayapply for the program at any time.

IfyouwouldlikemoreinformationaboutBadgerCarePlus,youcangotodhs.wi.gov/forwardhealthorcallmemberservicesat1-800-362-3002.



https://oci.wi.gov/Pages/Consumers/PI-203.aspx





F. Other Types of PoliciesThereareseveralothertypesofpoliciesonthemarket.Thesearenotsubstitutesforbasicormajormedicalcoverage.

Vision & Dental PoliciesThesearepoliciesthatprovidebenefitsonlyforvisionordentalcare.Theyshouldnotbeboughtassubstitutesformorecomprehensivecoverage.

HospitalConfinementIndemnityThistypeofpolicypaysafixedamountforeachdayinthehospitalforaspecifiednumberofdays.Sometimesbenefitsarenotpaiduntilyouhavebeenhospitalizedforseveraldays.Thesepoliciesareoftennotagoodbuyunlessthedailybenefitisquitehigh.

SpecifiedDiseasePoliciesThesepoliciescoveraspecificdiseaseorgroupofdiseases.Themostcommontypeiscancerinsurance.Ifyoualreadyhavecomprehensivecoverage,thiscoverageisnotnecessary.

Any insurer selling cancer insurance must give A Shopper's Guide to Cancer Insurance to applicants. The publicationisalsoavailableonOCI'sWebsite,orcallOCIat1-800-236-8517torequestacopy.

Health Discount CardsBewaryofhealthdiscountcardswhichofferareducedfeefordoctorvisitsorothermedicalservices.HealthdiscountcardsareNOThealthinsuranceplansandarethereforenotregulatedbyOCI.Somediscountcardshavebeenthesubjectofnumerousscamsinrecentyears,sobesuretochecktheseoutcarefully.

X. Disability Income InsuranceAnyonewhoworksshouldconsiderpurchasingdisabilityincomeinsurance,whichisdesignedtohelpreplaceincomelostbecauseofalong-terminjuryorillness.Peopleofworkingagearemorelikelytobecomedisabledthantheyaretodie—makingdisabilityinsuranceatleastasimportantaslifeinsurance.

Therearetwotypesofdisabilityinsurancepoliciesavailable:short-termcoverageorlong-termcoverage.Short-termpolicieswilltypicallyreplaceaportionofyoursalaryfromthreetosixmonthsfollowingyourdisability.Long-termpolicieswillgenerallybeginsixmonthsafteryourdisabilityandcanprovidecoverageforafewyearsorevenuntil retirement.

Youhavetobeawiseconsumer,lookatthedifferentproducts,andchoosetheproductthatbestsuitsyou.Theplacetostartisbydetermininghowmuchincomeyouneedtomeetcriticalfinancialobligations.Theseincluderent/mortgage,food,fuel/transportation,utilities,andloanobligations.Adisabilitymayalsobringwithitincreasedoradditionalexpenseslikehealthcarecosts,assistancewithdailyactivities,evenhomemodifications.

Disabilityincomepolicieshavewaitingperiodsbeforebenefitsbecomepayable.Thewaitingperiodstartsafteryouhavebecomedisabledforacovereddisability.Thelongerthewaitingperiod,thelowerthepremiumwillbe.Theperiodoftimeforwhichbenefitsarepayablecanalsovarybasedonwhetherthedisabilitywascausedbyanaccidentorillness.Along-termdisabilityincomepolicymayprovideforlifetimeaccidentbenefitsandillnessbenefitstotheageof65.Thelongerthebenefitperiod,thehigherthepremiumwillbe.

A. What it CoversTheamountofmonthlybenefitprovidedbyadisabilityincomepolicymaybestatedasapercentageofincomeorasasetdollaramount.Theamountofbenefitforwhichyoucanqualifyisusuallybasedonapercentageofyourgrossearnings,normallyaround60%.Apartialdisabilitybenefitmaybeprovided,ormaybeavailable,onanoptionalbasis.



Somepoliciesmayreduceyourbenefitbytheamountyoureceivefromsocialsecurityorworker'scompensation;soyourdisabilitybenefitandsocialsecurityorworker’scompensationbenefitstogetherwillprovideaspecifiedincome.Somecompanieswillconsiderpossiblesocialsecuritybenefitswhentheydecidetheamountofbenefitsforwhichyouqualify.

Occupationaltherapyandvocationalrehabilitationbenefitsmayalsobeprovidedbyadisabilityincomepolicy.

B. Things to Be Aware of Regarding Disability InsuranceAdisabilityincomepolicygenerallyrequiresthatyoubetotallydisabledbeforebenefitsarepaid.Thedefinitionoftotaldisabilityvariesfrompolicytopolicy.Therearetwodifferentdefinitionsusedindisabilitypolicies.Onedefinitionisthatyouareunabletoperformyourownoccupation.Theotherdefinitionismuchmorecomprehensiverequiringthatyouareunabletoperformanyoccupation(forwhichyouaresuitedbyeducationorexperience).Thisdistinctioncanbeimportantforjobsthatrequireveryspecializedphysicalskills such as surgeons or loggers.

Somepointstocheck:

• Whatisthedefinitionofdisability?Doesitcoverbothinjuryandsickness?Isitforpartialortotaldisability?Isitdefinedasinabilitytoperformyourcurrentoccupationorasinabilitytoperformanyoccupationofwhichyouarecapable?

• Whendoescoveragebegin?Isitdifferentforinjuryandsickness?

• Howlongwillbenefitsbepaid?Whatistheweeklyormonthlybenefit?

• Howmuchofyourincomewillbereplaced?

• Whatdoesitcost?

• Isitguaranteedrenewable?

• Disabilityincomepoliciesmayspecifythatincomebenefitswillnotbepaidtoadisabledpersonifthedisabilityresultsfromcertaincauses.Checkthepolicyforanyexclusionsorlimitationsthatmightapply.Ifyouhaveanyquestions,askyouragent.

C. Medical UnderwritingBeforeyoucanbuyadisabilityincomeinsurancepolicy,youmustgivetheinsurancecompanyinformationaboutyourhealth.Thisprocessiscalledmedicalunderwriting.Thecompanyusesmedicalunderwritinginformationtopredictwhatthelikelihoodisthatyouwillfileclaimsagainstthepolicy.Eachcompanyhasitsownunderwritingstandards,whichmeansonecompanycouldrejectyourapplicationbutanothermaybewilling to accept it.

Theinsurancecompanywillgetmostofitsunderwritinginformationfromthesesources:

• Your application form

• Yourpastmedicalhistory

• TheMedicalInformationBureau

Underwriting Decisions Insurancecompaniesmayacceptyourapplicationandissuethepolicyasrequested,ortheymaydooneofthefollowing:

• Issuethepolicywithfullprotectionbutchargeahigherpremium.Thismightoccurifyouhaveachronicdiseasesuchasdiabetes.


• Modifythebenefits,suchasincreasethedeductible.

• Excludeaspecificmedicalproblemfromcoveragebyaddinganexclusionrider.

• Decidenottoissueapolicy—turndownyourapplicationforinsurance.

• Ifyouareturneddownordeniedcoverage:

• Findoutwhyyouweredeniedcoverage.Thecompanyisrequiredtoprovideyouwiththatinformationinwriting.Ifitisduetoyourmedicalhistory,makesuretheinformationthecompanyreceivedwascorrect.

• Tryseveralotherinsurancecompanies.Everycompanyhasitsownunderwritingguidelines.Somemayviewyoursituationdifferently.

The Medical Information BureauWhenyousigntheapplicationform,youauthorizetheinsurancecompanytoobtaininformationaboutyoufromtheMedicalInformationBureau(MIB).TheMIBisaprivatecompanyusedbyinsurancecompaniestoshareinformationaboutinsuranceapplicants.Ifyouaredeniedcoveragebasedonmedicalhistory,youmaywanttofindoutifyouhaveanMIBfile,andifso,isitcorrect?Ifyourfilecontainsincorrectinformation,youhavetherighttoasktheMIBtocorrectit.Youmayobtainacopyofyourreportbycontacting:

Medical Information Bureau (MIB) 50 Braintree Hill Park #400

Braintree,MA02184 (866) 692-6901

(866)346-3642TTY(forhearingimpaired) www.mib.com

XI. Buying InsuranceForthemostpart,insuranceissolddirectlythroughaninsurancecompanyorindirectlythroughanagentorbroker.Anindependentagentmayrepresentmorethanoneandsometimesseveralinsurancecompanies.Anexclusiveorcaptiveagentsellssolelyforoneinsurerorgroupofrelatedinsurers.Independentagents,aswellasexclusiveagents,mayplacebusinesswithanotherinsureriftheinsurer(s)heorsherepresentsdoesnotwritethetypeofinsuranceneeded.Abrokerrepresentsyouinyourdealingswithaninsurancecompany.

Inbuyinginsurance,priceiscertainlyabigconsideration.However,understandthat your insurance agent also performs an important role. An agent makes sure theinsuranceisup-to-date,reflectingtheactualvaluesofthebusiness,suchasadditionalorreplacementequipment,newstructure,orexpandedoperations.It is important to discuss with your agent at least once a year, any changes that have occurred during the year, any increases in values, and increases in payroll and receipts.

Anagentcanofferadviceontheamountandtypesofbusinessinsuranceyouneed.Youmayneedtoworkwithseveralagentstomakesureyouaregettingtheneededcoverageatthebestavailableprice.

Toassureyouaredealingwithareliableagent,youmaywishtotalkwithotherbusinessownersinyourcommunitytolearnwhatagentstheyuseandhowsatisfiedtheyarewiththeseagents.Youshouldalsodiscussyourneedswithanagentwhohasexperiencewithyourparticulartypeofbusiness.Ifyouarealandscapegardener,forexample,therisksyoufacewillbeverydifferentfromthoseofanicecreamparlorandyoumayneedanagentwhospecializesinyourfieldtoassistyou.

When buying business insurance, you should:•Contactseveralagentsandinsurance companies.

•Shoparound.

•Understandwhatyouarebuying.

http://www.mib.com/


AllcompaniesandagentsdoingbusinessinWisconsinarelicensedbyOCI.LicensinginformationaboutagentsandcompaniescanbefoundonOCI’sWebsiteatoci.wi.gov.

XII. Before Disaster StrikesBeforeafire,theft,oranaccidentstrikes,youwillsavetime,money,andanxietybydoingtheseimportantthingsnow:

• Studyyourinsurancepoliciestoseewhatisandisnotcovered.Makesureyouunderstandyourpoliciesbeforeyouhavealoss.Forexample,doyouknowtheanswerstothesequestions:

Howmuchliabilityinsurancedoyouhave?

Whatarethefinancialresponsibilityrequirementsforyourautoinyourstate?

Whatdeductiblesdoyouhaveonyourcarsandtrucks?

• Askyourinsuranceagenttoexplainanythinginthepolicyyoudonotunderstand.

• Makesureyouandyouremployeesknowwhattodoifyouhavealossandneedtosubmitaclaim.

• Keepanupdatedinventoryofyourbusinesspropertywithappropriatedocumentation.Remembertoincludeleasedpropertynotspecificallyinsuredbytheleasingcompany.

XIII. Legal ProtectionsWisconsinhasseverallawstoprotectyoubeforeandafteryoupurchaseinsurance.

• Insurancecompaniesandagentsmaynotmisrepresentthetermsofaninsurancepolicy.

• Insurancecompaniesmaynotunreasonablydelaytheirclaimsinvestigations,failtopayalegitimateclaimwithinareasonabletimeafterproofofloss,orengageinotherunfairclaimssettlementpractices.

• Insurancecompaniesmaynotcancelapolicymid-termunlessspecific,limitedreasonsjustifythecancellation.

• Insurancecompaniesmustprovidea60-daynoticeofnonrenewal.Theyalsomustgive60days’noticeofrenewalonalteredtermsofanexpiringpolicywhenthecompaniesincreaseratesbyover25%unlesssomethingyoudocausestheincrease.

• Althoughaninsurancecompanymaycancelyourpolicyfornonpaymentofpremium,youmaybeentitledtoagraceperiod.Agraceperiodistheperiodduringwhichcoveragecontinuesevenifthepremiumhasnotbeenpaid.Forindividuallifeinsurancepolicies,itisonemonth.Forhealthinsurance,itissevendaysforweeklypremiumpolicies,tendaysformonthlypremiumpolicies,andonemonthforallotherpolicies.Nograceperiodisrequiredforautoorpropertyinsurance.

• Ifyoubelieveaninsurancecompanyhasviolatedyourrights,youmaywanttofirstcomplaintoyouragentortheinsurancecompany.Ifthisdoesnotresolvetheproblem,youmayfileacomplaintwithOCI. AcomplaintformisavailableonOCI'sWebsiteatociaccess.oci.wi.gov/complaints/public/.

XIV. Unfair Discrimination• Insurersmaynotrefuse,cancel,orrestrictcoverageonthebasisofthesexoftheapplicantorinsured.

• Insurersmaynotrefuse,cancel,ordenycoverageforautoorpropertyinsurancesolelybecauseofapastcriminalrecord,physicalordevelopmentaldisability,pastmentaldisability,age,maritalstatus,sexualpreference,or“moral”character.

• Insurersmaynotrefuse,cancel,orlimittheamountofcoverageforpropertyorcasualtyinsurancebecauseofthegeographiclocationoftheriskunlessrequiredbylaworforalegitimatebusinesspurpose.

• Noinsurermayrefuseorlimitcoverageorchargeadifferentratebecauseofamentalorphysicalconditionexceptwhentherefusal,limitation,orratedifferentialisbasedoneithersoundactuarialprinciplesoractualorreasonablyanticipatedexperience.


https://ociaccess.oci.wi.gov/complaints/public/


GlossaryActual cash value: The value of the property when it is damagedordestroyed.Thisisusuallyfiguredbytakingthereplacementcostandsubtractingdepreciation.

Adjuster: An insurance company representative who seekstodeterminetheextentofthefirm’sliabilityforlosswhenaclaimissubmitted.

Agent:A person licensed by a state insurancedepartment who solicits, negotiates, or effectsinsurancecontractsonbehalfofoneormoreinsurers.

All risks:Theterm“allrisk”meansthereiscoveragefor all perils except those excluded.A particularexposurewouldbeinsuredagainsteconomiclossbyanyperilnotspecificallyexcludedunderthetermsofthe contract.

Auto insurance: A type of insurance that protects thepolicyholderagainstlossesinvolvingautomobiles.Differentcoveragescanbepurchaseddependingontheneedsandwantsoftheinsured.

Binder:Anagreementtoprovideimmediateinsurancecoverage. May be oral or written and sets forthconditionsofcoverage.Oftenusedduringtheintervalbetweenthecoveragebecomingeffectiveandthetimeaformalpolicyispreparedanddelivered.Normallyitisissuedforalimitedperiodoftime.

Broker:Amarketingspecialistwhorepresentsbuyersof property and liability insurance andwho dealswith either agents or companies in arranging for the coveragerequiredbythecustomer.

Captive agent: An agent who sells insurance for only onecompany,asopposedtoan independentagentwho represents several companies.

Claim:Arequestforreimbursementforalosscoveredbythepolicy.Forexample,aclaimforitemsstolenfromthepolicyholder’sbusiness.

COBRAbenefits:COBRAstandsfor“ConsolidatedOmnibusBudgetReconciliationActof1985,”whichrequires companies with 20 or more employees to offer separating employees the option to continue their group health care coverage at their own expense.

Coinsurance:Aprovisionthatrequirestheinsuredtoshareinthecostofcoveredservicesonapercentagebasis.Atypicalcoinsurancearrangement is80%bytheinsurerand20%bytheinsured.

Collision: An optional auto insurance coverage that paysfordamagetothepolicyholder’scarcausedbyitscollisionwithanothervehicleorobject.

Comprehensive coverage or Other than Collision: Personal auto insurance policies use this term for physical damage coverage for losses by fire, theft,vandalism,fallingobjectsandvariousotherperils.

Conditions: Provisions of an insurance policy that statetherightsanddutiesoftheinsuredortheinsurer.Typical conditions have to dowith such things astheinsured’sdutiesintheeventofloss,cancellationprovisions,andtherightoftheinsurertoinspecttheproperty.

Copayment: A provision in insurance policies that requirestheinsuredtopayaflatfeeforcertainmedicalexpenses.

Coverage:Thescopeofprotectionprovidedunderaninsurance contract.

Deductible:Theamountofaninsuredlosspaidbythepolicyholder.Forexample,ifyouselectadeductibleof$250foryourautoinsurancepolicy,youagreetopaythefirst$250worthofdamagestoyourcarifyouareinanaccident.

Definednetworkplan:Anyhealthbenefitplanthatrequires or creates incentives for an enrollee to use providersthatareowned,managed,orundercontractwith the insurer offering the plan. This type of plan is sometimesreferredtoasamanagedcareplan.

Depreciation:Adecreaseinthevalueofpropertyoveraperiodoftimeresultingfromuse,obsolescence,orwearandtear.

Disability insurance: A type of health insurance that paysamonthlyincometothepolicyholderwhenheorsheisunabletoworkbecauseofanillnessoraccident.

Endorsement: An attachment to an insurance policy thatamendsandaltersthecoverageprovidedinthepolicy.Inlifeandhealthinsuranceitiscalledarider.

Exclusions: Specific situations, conditions, orcircumstancesthatarelistedintheinsurancepolicyasnotbeingcovered.

Health insurance: A general term for insurance againstlossbysicknessorbodilyinjury.Thisusually


includes coverage formedical expenses such asdoctorvisitsandhospitalstaysandcancovernormalandpreventivecaresuchascheckups,prenatalcare,andwell-babycare.

Independent agent: An insurance agent who represents more than one insurer.

Insurance:Aformaldeviceforreducingthechanceof lossbytransferringtherisksofseveral individualentities to insurance companies.

Insured: The party covered by an insurancearrangement,towhomaninsurancecompanyagreesto indemnify for losses, provide benefits, or renderservices.

Liability:Individualresponsibilityforcausing,throughnegligence, injury to another person or damage toanother person’s property.

Managed care:(seeDefinednetworkplan)

Market value: This is a value placed on real orpersonal property which relates to its resale value in themarketplace.Since theobjectofmostpropertyinsurancepoliciesistopaytheinsuredtheactualcashvalueorthecosttorepairorreplacethedamagedordestroyedproperty,the“market”or“book”valuesarenotusedinlosssettlements.

Medical payments insurance:Aformofcoverage,optional in various liability policies such as autoinsurance,whichprovidesforthepaymentofmedicalandsimilarexpensesregardlessofliability.

Namedperilorspecifiedperil:Thisisaperilindicatedoridentifiedinthecontractasacauseoflossforwhichinsuranceisbeingprovided.Undersuchcontractsifaperilisnotnamedorspecifieditisnotcovered.

Package policy: A single insurance policy that combinesseveralcoveragesavailableseparately.Forexample, businessowner’s insurance is a packagepolicy,combiningproperty,liability,andtheftcoverages.

Peril: A property insurance term referring to the possiblecauseoflosssuchasafireorwindstorm.

Personal property:Alltangiblepropertynotclassifiedas real property.

Policy:Awrittencontractforinsurancebetweentheinsurancecompanyandthepolicyholder.

Premium: The amount of money an insurance companycharges,basedonagivenrate,toprovidethecoveragedescribedinthepolicy,orsimplystated,thepriceofinsuranceprotectionforaspecifiedriskforaspecifiedperiodoftime,typicallyoneyear.

Property/Casualty insurance: Property insurance coversdamagetoorlossofthepolicyholder’sproperty.Theterms“casualty”and“liability”insuranceareoftenused interchangeably.Bothcover thepolicyholder’slegal liability for damages caused to other personsand/ortheirproperty.

Rate:Thecostofaunitofinsuranceasdeterminedbyinsurancecompaniesandstateregulators.Therateservesasthebasisforthepremium.

Real property:Landandmostthingsattachedtothelandsuchasbuildingsandvegetation.

Replacement cost: The cost of replacing property withoutadeductionfordepreciation.

Risk:Thiswordhastwomeaningsforinsurers:(1)thechanceoflosssuchasfromaperil;and(2)thepersonorentitythatisinsuredbyapolicy.

Theft: The act of stealing or taking the property of another.

Umbrella liability: A form of insurance protection against losses inexcessof theamount coveredbyother liability insurance policies; also protects theinsuredinmanysituationsnotcoveredbytheusualliabilitypolicies.

Underwriting:Theprocessbywhich an insurancecompanyselectsandclassifiesrisksaccordingtotheirdegreeofinsurability.

Underinsured motorist (UIM) coverage: Coverage in an automobile insurance policy underwhich theinsurancecompanywillpaydamagestotheinsuredforwhichanothermotoristisliableifthemotoristcausinganaccidenthaslowerbodilyinjuryliabilitylimitsthanyourUIMlimits.Themaximumdollarspaidisthenthedifferencebetweenthetwolimits.

Uninsured motorists (UM) coverage: Coverage in an automobileinsurancepolicyunderwhichtheinsurancecompanywillpaydamagesto the insuredforwhichanothermotoristisliableifthatmotoristisunabletopaybecauseheorsheisuninsured.Thiscoverageappliestobodilyinjurydamagesonly.Injuriestotheinsuredcausedbyahit-and-rundriverarealsocovered.


Utilization review:A method of claims reviewwhereby the insurance company analyzes a case,either prospectively, concurrently, or retrospectivelytodetermineifthetreatmentgivenisnecessaryandappropriate.

Worker’s compensation: A policy conforming to statelawwhichpaysbenefitstoanemployee(oranemployee’sfamily)iftheemployeesuffersajob-relatedinjury(includingdeath)oroccupationalinjury.