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- Audit.
- A survey of the insured's payroll records to determine the premium that should be paid for the coverage furnished. Used in Workers Compensation and General Liability policies. (WC,LA)
- Average Weekly Wage.
- A term generally used in Workers Compensation laws. It is the basis for determining weekly benefits under such laws.
- Competitive State Fund.
- This term refers to a fund established by a state to write Workers Compensation Insurance in competition with private insurers.
- Compromise and Release Agreement.
- A settlement practice under which an injured worker agrees to a compromised liability amount (usually a lump sum) in exchange for releasing the employer from further liability.
- "D" Ratio.
- A factor used in Workers Compensation experience rating plans. It is the ratio of smaller losses (those under $2,000), plus the discounted value of large losses, as compared to the total losses which might be expected of an insured in a particular type of business.
- Disability, Permanent Partial.
- See Permanent Partial Disability. (WC,H)
- Disability, Permanent Total.
- See Permanent Total Disability. (WC,H)
- Disability, Temporary Partial.
- See Temporary Partial Disability. (WC,H)
- Disability, Temporary Total.
- See Temporary Total Disability. (WC,H)
- Domestic.
- See Residence Employee.
- Employers Liability Coverage.
- This is coverage B of the standard Workers Compensation policy. It provides coverage against the common law liability of an employer for injuries to employees as distinguished from the liability imposed by a Workers Compensation law. Employers Liability applies in situations where a worker does not come under these laws.
- Excess Loss Premium Factor.
- This expression is used in connection with retrospective rating plans. It is a factor which compensates the insurer for the fact that the insured has elected to limit the effects of any one large loss under the retrospective rating formula. For example, the insured might elect a loss limitation of $50,000, which would mean that would be the maximum amount of any one loss that would go into the retrospective calculation.
- Federal Employees Compensation Act.
- Under this Act, workers compensation benefits are provided to civilian federal government employees. The U.S. government administers and operates the system, as well as provides the benefits. Therefore, no private insurance is involved.
- Federal Employers Liability Act (FELA).
- Passed by Congress in 1908 before there were worker compensation statutes and benefits in this country, this Act applies to railroad workers only. It puts injured workers in a favorable position in terms of liability claims, allowing them to sue the employer for negligence. Because railroad workers and their unions were unwilling to trade their favorable positions for statutory benefits, they remain exempt from compensation laws in many states. Cases are decided on the issue of employer liability.
- Fellow Servant Rule.
- A common law defense used by employers before the passage of compensation laws. It held that if an employee was injured due to the carelessness of a fellow employee, the right of action was against the fellow worker and not against the employer.
- Governing Classification.
- The classification assigned to the operations of an insured which carries the largest amount of payroll.
- Guaranteed Cost.
- A premium charged on a prospective basis, fixed or adjustable, or on a specified rating basis, but never on the basis of loss experience. In other words, the cost is guaranteed to the extent that it will not be adjusted based on the loss experience of the insured during the period of coverage. (WC,LA)
- Intermediate Disability.
- See Temporary Partial Disability and Permanent Partial Disability. (H,WC)
- Intermediate Report.
- A claim report on the condition of a continuing disability. (H,WC)
- Jones Act.
- The federal act which provides for the covering of ships' crews under Workers Compensation plans.
- Longshoremen's and Harbor Workers' Act.
- A federal act that stipulates compensation levels for injured longshoremen and harbor workers.
- Loss Conversion Factor.
- A term used in a retrospective rating plan. It is a factor applied to the losses in the formula to give the insurer the funds needed to handle the investigation of claims. (WC,LA)
- Loss Development Factor.
- This is a recent development under retrospective rating plans. It was designed to give the insurer additional money to allow for the subsequent development of losses and to reimburse for claims which are late in being reported. The factor was introduced primarily because of the effect of inflation on losses which take a long time to settle. See also IBNR.
- Loss Limitation.
- Another term used in retrospective rating formulas. It is designed to limit the effect of catastrophic losses that would otherwise be considered in full in figuring the final retrospective premium.
- Maximum Retrospective Premium.
- The most an insured will be required to pay under a retrospective rating plan, regardless of the amount of losses incurred. (WC,LA)
- Minimum Retrospective Premium.
- Used in a retrospective rating plan and defined as the lowest amount the insured can pay under the plan, regardless of the losses incurred. (WC,LA)
- Monopolistic State Fund.
- The state-operated company in those states having laws which require that all businesses buy Workers Compensation Insurance from the state. Private insurers cannot compete in these states.
- NCCI.
- See National Council on Compensation Insurance.
- NOC.
- Not Otherwise Classified. A term often found in the classification section of Liability or Workers Compensation rating manuals. If a listing is followed by an NOC, it means to use this classification if an insured cannot be classified more specifically. (LA,WC)
- Not Otherwise Classified.
- See NOC. (LA,WC)
- NPD.
- No Payroll Division.
- National Council on Compensation Insurance (NCCI).
- An association of insurers selling compensation coverage and operating as a rating organization. NCCI collects statistics, develops rates and policy forms, and makes state filings for its members.
- Occupational Disease.
- Sickness or disease arising out of or in the course of employment. State compensation laws provide coverage for this type of loss.
- Occupational Hazard.
- A condition in an occupation that increases the peril of accident, sickness, or death. (LI,H,WC)
- Occupational Manual.
- A book listing occupational classifications for various types of work. (LI,H,WC)
Workers Compensation
- Partial Disability.
- See Permanent Partial Disability and Temporary Partial Disability. (G,WC,H)
- Payroll Audit.
- An examination of an insured's payroll record by a representative of the insurer to determine the final premium due on a policy for the latest policy year. (WC,LA)
- Permanent Partial Disability.
- A condition where the injured party's earning capacity is impaired for life, but he is able to work at reduced efficiency. (WC,H)
- Permanent Total Disability.
- A condition where the injured party is not able to work at any gainful employment for the remaining lifetime. (WC,H)
- Rating, Retrospective.
- See Retrospective Rating. (LA,WC)
- Rehabilitation Benefits.
- Physical and/or vocational rehabilitation benefits provided to an injured person following a work-related injury, and intended to restore the person to a point where gainful employment is possible.
- Residence Employee (or Domestic).
- A person who performs full- or part-time services of a household nature.
- Second Injury Fund.
- Special funds set up by each state to pay all or part of the compensation required when a partially disabled employee suffers a subsequent injury. Because the compound effect of two injuries can be greater than the effect of the same two injuries in isolation, employers might be reluctant to hire the handicapped if they had to bear the full burden for a second injury. Second injury funds relieve employers of some of this burden.
- Standard Exception.
- In Workers Compensation Insurance certain classes of employees are classified separately for rating, rather than being included in the main classification for a risk. Examples would be clerical office employees, outside sales representatives, draftsmen, drivers, chauffeurs, and their helpers.
- Standard Premium.
- Most often used in connection with retrospective rating for Workers Compensation and General Liability Insurance. It is the premium of which the basic premium is a percentage and is developed by applying the regular rates to an insured's payroll. See also Retrospective Rating and Basic Premium. (WC,LA)
- Statewide Average Weekly Wage (SAWW)
- A statistical computation which is periodically updated and is used to determine compensation benefit amounts. Many benefits are set forth as a percentage of the SAWW.
- Tax Factor (or Tax Multiplier).
- A factor applied in retrospective rating to an insurance premium to increase it to cover state premium taxes. (WC,LA)
- Temporary Partial Disability.
- A condition where an injured party's capacity is impaired for a time, but he is able to continue working at reduced efficiency and is expected to fully recover. (WC,H)
- Temporary Total Disability.
- A condition where an injured party is unable to work at all while he is recovering from injury, but he is expected to recover. (WC,H)
- Voluntary Compensation Insurance.
- A coverage similar to Workers Compensation used in circumstances in which Workers Compensation coverage does not apply or is not required by law. An example would be an employer wanting to voluntarily pay compensation benefits to members of a company-sponsored athletic team, or a church wishing to cover volunteer workers.
- WC.
- See Workers Compensation.
- Workers Compensation.
- (1) A schedule of benefits payable to an employee by his employer without regard to liability, required by state law in the case of injury, disability, or death as the result of occupational hazards. (2) Insurance agreeing to pay Workers Compensation law benefits on behalf of the insured employer.
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