Employing persons to assist in the operation of your business also carries special risks and additional expenses.  If you have employees, the law requires you to maintain workers' compensation insurance coverage.  An exception to this requirement is your company is "permissibly self insured."  This status is not easy to obtain, and requires the deposit of a large bond. Small business would normally not be eligible for this status, and thus would be required to secure workers' compensation insurance.  The cost of these policies are in part determined by the number of employees you have, the amount of your payroll, and the number of previous workers' compensation claims filed against your company.  Another factor is the type of business you are conducting.  For example, the policy for a factory using large manufacturing equipment would generally be more expensive then the policy for an accounting firm.  The risk for greater injury is higher.

What if an employee files a workers' compensation claim against your company, and any of the following exists:

• You did not have workers' compensation insurance at the time of the alleged injury.
• You had  insurance, but your carrier is claiming it lapsed for various reasons, (ie. typically non-payment of premium, however, another reason commonly given is failure to report payroll).
• In addition to the claim for injury, the employee files a 132a or "serious and willful" complaint against you which the insurance carrier informs you that they do not provide you coverage.

An uninsured employer faces risks that could potentially shut down their business.  An injured employee will typically  an attorney to represent them.  Once it is learned that you were uninsured,  the Uninsured Employers Fund (UEF) will be joined into the claim.  They are a State agency who's function is to pay an injured employees benefits.  You should not proceed on the false belief that their function is to represent you!  They will dispute the injury, or nature and extent of the injury when appropriate.  They will litigate the injury at the workers' compensation appeals board.  However, they are not acting on behalf of the employer, but instead, on behalf of the State.  If they are ordered to pay the employee, or settle with the employee, they will bring an action against the employer for reimbursement. The employer also faces the risk of substantial penalties.

The employee also has the option of pursuing his claim in the civil courts.  This allows them to pursue civil damages as well as penalties for failure to procure insurance.

IF YOU BELIEVE THE INSURANCE COMPANY IS WRONGFULLY DENYING YOU COVERAGE.
Again, you should retain an attorney who knows the workers' compensation system.  The workers' compensation board will set coverage issues for arbitration.  As you can see from what was previously stated, winning the coverage dispute could save you aggravation as well as a great deal of money.