SAIF Corporation© WCB Coverage section
Web Page Last Updated 9-11-97
URL: http://www.saif.com/wc_basics/coverage/coverage.htm
An insured employer is relieved of claim liability under Oregon’s “no fault” workers’ compensation law. Subject Oregon workers are entitled to compensation and medical benefits for any compensable injury or occupational disease resulting from employment.
Employers’ liability insurance with limits of $100,000 per accident and $100,000 per occupational disease is included as part of the basic insurance. An aggregate limit of $500,000 is provided for all occupational disease damages. This coverage is designed to protect the employer from suits brought by his or her own employees for damages resulting from work-related injuries where the worker attempts to circumvent the ‘Exclusive Remedy’ provisions of the basic policy. This coverage is subject to the conditions and exclusions set forth in the policy. Higher limits may be available by special application for an additional charge.
Your Oregon workers' compensation policy covers Oregon employees whose jobs require them to work temporarily in another state, providing the other claims are filed in Oregon. However, workers you hire in that other state are not covered by your Oregon policy nor are workers you hire in Oregon specifically for the out-of-state job. For maximum protection, employers should obtain a policy in each state where the work is performed. Since each state law varies, we strongly recommend that before starting work, you contact the regulatory agency in the other state to determine its requirements. If you do not have coverage recognized by the other state, you will be responsible for all claim costs, premiums and penalties for being a noncomplying employer. Even if you have SAIF coverage in Oregon, other states may consider you a noncomplying employer.
If you are an employer based in another state, bringing workers into Oregon to perform work on a public contract let by an Oregon political subdivision, you must cover these workers with an Oregon policy, regardless of the length or nature of the work.
For subjectivity advice and/or coverage sources in neighboring states, please call:
CALIFORNIA
Division of Workers' Compensation (DWC)
Telephone: 415-975-0700
Caution: Workers hired in CA may be entitled to CA benefits,
even if hired to work in Oregon.
IDAHO
Industrial Commission (IC)
Telephone: 208-334-6000 or 1-800-950-2110
Caution: Special rules for reforestation.
MONTANA
Employment Relations Division (ERD)
Telephone: 406-444-6530 or 1-800-332-6102
Caution: Special rules for construction.
WASHINGTON
Insurance Services Division
Telephone: 360-902-4817
Your nearest SAIF office can provide the address and telephone number of regulatory agencies in other states.
Workers covered by basic insurance
“Worker” means any person, including a minor, who furnishes services for remuneration, subject to the direction and control of an employer. This includes salaried, elected and appointed officials of the state, state agencies, counties, cities, school districts, and other public corporations. This may also include contract workers (regardless of the contract’s terminology). To determine if a contract worker is subject to Oregon’s workers’ compensation law, contact your local SAIF office, before employment begins.
Not all workers are required to be covered by the workers’ compensation system. The following is a list of some situations where the worker is not covered under the law. For a complete list of non-subject workers, contact your local SAIF office.
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A worker performing domestic duties, including home health care workers under contract with a private party in a private home. |
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A worker employed to do gardening, maintenance, repair, remodeling or similar work in or about the private home of the employer. |
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A sole proprietor of an independent business. |
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A partner in an independent business. If the business performs construction work regulated by the Contractors Construction Board, there are restrictions as to how many partners can be exempt. (See Endorsements.) |
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A member of a Limited Liability Company (LLC). If the LLC performs construction work regulated by the Contractors Construction Board, or the Landscape Contractors Board, there are restrictions as to how many members can be exempt. (See Endorsements.) |
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An officer of a corporation that operates as an independent business who is a director and has substantial ownership interests in the corporation. Corporations in the timber harvest and construction industries and family-owned corporations have special officer exemption rules. (See Endorsements) |
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A newspaper carrier who is a minor and who meets specific criteria. |
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A person who furnishes, maintains and operates motor vehicles used to transport logs, poles, piling, rocks, gravel, sand, dirt or asphalt concrete. |
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A foster parent or adult foster care provider or their employees meeting certain certification requirements while performing foster parent duties. |
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Workers in a small business where the total earnings for all workers has NEVER exceeded $500 for any 30-day period. (Note: Do NOT use an average monthly payroll.) |
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Subcontractors registered with and performing work regulated by the Construction Contractors Board or the Landscape Contractors Board are considered independent contractors. Where the subcontractor is a multiple person entity, as is a partnership, corporation or limited liability company, there are numeric restrictions on how many of the owners can be exempt. |
A SAIF Corporation policyholder may elect to cover certain non-subject workers. Such endorsements are effective when the employer’s application for additional coverage is received and accepted by SAIF.
Sole proprietors, limited liability company (LLC) members and partners
Non-subject sole proprietors, LLC members and partners may make written application to be personally covered as subject Oregon workers under their policies. They are not personally covered until SAIF receives and accepts their application. The cost of each personal election is based upon the normal rate for the occupation; but instead of actual wages, an assumed wage is set. The coverage and premium charges continue until the election is canceled in writing, or the policy is canceled.
Adding coverage for LLC members and partners is complicated by laws relating to firms doing work subject to the Construction Contractors Board and Landscape Contractors Board. Such members and partners are subject workers unless the entity submits a form designating named owners to be exempt. If the firm wants to cover a given owner, that owner’s name is not listed as exempt. LLCs and partnerships doing landscaping or construction work are limited to exempting either two owners or one owner for each ten employees, whichever is greater, as long as exempted individuals have either a ten percent ownership interest or at least an amount equal to the average interest held by all owners. An exception exists if all LLC members or all partners are of the same family. In this case, any number of members or partners can be exempted, as long as they individually meet the above ownership criteria. To invoke exemption for LLC members or partners of construction firms requires a special form must be filed with the insurer. Please contact the SAIF office in your area for more information.
A corporate officer who is not subject under the workers’ compensation law may elect to be covered. A written application should be sent to SAIF and include the officer’s name, title and specific duties. The cost of coverage is based on the normal rate for the occupation and actual earnings, subject to minimum and maximum limits. The coverage and premium charges continue until the election is canceled in writing, or the policy is canceled. Policyholders who have questions about this area should contact their local SAIF office for clarification.
In general, an officer is not required to have coverage if he/she meets the following three tests:
| (a) | occupies a named officer position authorized in the bylaws; |
| (b) | is on the board of directors |
| (c) | owns either 10 percent or more of the stock or a percentage equal to the average stock holding. |
Failure to meet all three tests means the officer is automatically a subject worker and no election of coverage is necessary.
Note: If the corporation is doing work subject to the U.S. Longshore and Harbor Workers’ Compensation Act, any officers performing such work are non-exempt and are automatically covered.
Other criteria apply to family-owned corporations and to corporations involved in construction or timber harvest.
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If the corporation operates a family-owned farm on land receiving farm use tax assessments, family members on the board of directors are not subject. They need not occupy titled officer positions (e.g. vice president, secretary, treasurer) and they need not have a stock interest. |
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If the corporation is involved in the construction or timber harvest industries, but the officers are not all family members, the three-point test applies. However, there is a numerical limit on how many officers are not subject. Each corporation is given two exemptions or one exemption for each 10 corporate employees, whichever is greater. The corporation may determine which officers, up to the limit, are exempt by notifying its workers’ compensation insurance company in writing and giving the position titles and individuals’ names. If the corporation does not designate the exempt officers the exemptions will be in this order: president, secretary, vice president, secretary-treasurer, treasurer and all other positions. If more than one person shares a title (such as having two vice presidents), date of birth will be the deciding factor with the youngest being exempted before the oldest. |
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If the corporation is involved in the construction or timber harvest industries and all officers are members of the same family and are parents, daughters or sons, daughters-in-law, sons-in-law, or grandchildren, the three-point test will still be used to determine which officers are eligible for exemptions. However, there is no limit on the number who may be exempted. The corporation must designate, in writing to the insurer, the names of the eligible officers to be exempted. |
Vehicle operators who furnish, maintain and operate motor vehicles used to transport logs, poles, piling, rocks, gravel, sand, dirt or asphalt concrete.
These vehicle operators (usually log truckers and dump truckers) may be insured by endorsement to the coverage of the firm employing them, or they may elect to obtain their own workers’ compensation insurance. Any additional workers hired must be covered by the operator or the company who hired the operator.
Coverage by endorsement may be obtained for certain people who otherwise would not be covered while working for public employers. These include non-salaried public officials; municipal volunteer personnel; emergency volunteer personnel; welfare recipients; and inmates of city or county jails, whether imprisoned or doing alternative community service work.
Coverage may be added to the employer’s existing policy if the domestic servants are actual employees of the legal employer named in the policy. For example, a husband-wife partnership engaged in a retail business may apply to insure its non-subject domestic servants under the same policy.
Household employment for gardening, repair, maintenance and remodeling
This endorsement is similar to that for domestic servants, but applies to workers who maintain the structure and grounds of the private residence of the employing entity.
Longshore and Harbor Workers’ Compensation Act
This applies to all longshore workers, ship repairers, ship builders, ship breakers and harbor workers whose employers are engaged in maritime employment. The act covers work on the navigable waters of the United States and any adjoining pier, wharf, dry dock, terminal, building way, marine railway, or other adjoining area customarily used by an employer in loading, unloading, repairing or building a vessel. The act excludes employees of political subdivisions, masters or members of the crew of a vessel, and certain other classes of employees defined by Congress in the Longshore and Harbor Workers’ Compensation Act amendment of 1984. Officers of corporations, when working subject to this act, are employees of the corporation. No provision is made to cover sole proprietors or partners under this act. SAIF Corporation customers may file an application for coverage under the Federal Longshore and Harbor Workers’ Compensation Act.
Federal maritime laws, including the Jones Act
This applies to masters or members of the crew of a vessel used on navigable waters. SAIF may provide coverage under certain conditions.
Federal Employers’ Liability Act
This act applies to employers operating a railroad. SAIF may provide coverage under certain conditions.
Changes in business structure and operations
Structural and operational changes can affect coverage and the cost of insurance. If your business undergoes a change in ownership or legal employing entity, coverage may end and a new policy may be required. Premiums may also be increased or decreased when there is a change in:
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Work performed by employees |
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Materials used |
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Products produced |
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Service provided |
Therefore, it is important that policyholders contact SAIF Corporation when business changes occur.
Cancellation of basic insurance policy
A SAIF Corporation policyholder may cancel coverage by giving at least 30 days written notice. The cancellation becomes effective at midnight, 30 days after SAIF receives the cancellation, unless a later date is specified. However, if an employer obtains insurance with another carrier prior to the end of the 30-day period, this cancellation becomes effective when the other coverage begins.
If the policy is canceled by the insured employer prior to the expiration date for reasons other than those listed below, a short rate (higher) premium is charged.
The short rate premium results in an additional charge which may exceed 10 percent of the projected annual premium. Retrospective rating plans have special cancellation provisions contained in their written agreements.
The normal policy period is 12 months, but may vary initially. The employer will receive a renewal notice no later than 30 days prior to the policy expiration date. The notice will state when fees are required to renew the policy and if they are payable in advance. If SAIF does not receive the required advance fees on or before expiration, coverage terminates at midnight on the expiration date. SAIF reserves the right to refuse renewal of a policy. When this happens, an employer is advised of other means to obtain coverage. SAIF provides at least 30 days notice of nonrenewal. If SAIF is withdrawing coverage from a specific premium category, the notification is made 90 days prior to nonrenewal.
An insurance policy is a contract between the insurer and a specified legal entity. Therefore, if a business entity changes (e.g., a partner is dropped or added) or a change in ownership occurs, it is important to notify SAIF because such changes may terminate coverage.
When an employer discontinues a business, the insurance may be terminated effective with the last day of employment. Therefore, it is important that the employer notify SAIF Corporation of the exact date the business ceases, and indicate whether the policy should be continued for the employer’s next business venture. When a new employer takes over a business, that employer must apply for a new policy.
SAIF cancels coverage 30 days after a formal demand for unpaid premiums or non-payment of a required deposit. Such a notice is sent by certified mail and states that non-payment will result in default and/or cancellation of coverage. If premiums are past due, a default results in a penalty of 10 percent of the amount due.
Any endorsement may be canceled by written notice from the employer without resulting in a short rate premium. All endorsement cancellations are effective when SAIF receives them, except Longshore and Harbor Workers’ Compensation, which cannot be canceled until 30 days after SAIF gives notice to the U.S. Department of Labor.
Oregon Workers’ Compensation Insurance Plan
The Oregon Workers’ Compensation Insurance Plan, also known as the assigned risk pool, was created by the Oregon Legislature in 1979. It is designed to be a guaranteed source of workers’ compensation insurance for businesses unable to obtain coverage in the voluntary market because of poor loss experience, safety practices, credit history, size or nature of the business. No insurer, including SAIF, is required to be the insurer of last resort, as that would require some businesses to unfairly subsidize the coverage of others.
SAIF is not responsible for administering the assigned risk pool nor for placing businesses in the pool. Oregon’s Department of Consumer and Business Services has designated the National Council on Compensation Insurance (NCCI) as the plan administrator. As such, the NCCI has responsibility for the pool’s actual operation. The NCCI processes applications to the pool and assigns eligible businesses to insurance companies who have agreed to act as servicing carriers. SAIF is one of four insurance companies in the State of Oregon that acts as a servicing carrier. The servicing carrier writes the policy for the employer in its own name and provides underwriting, claims and loss control services on the same basis as it does for its voluntary customers. The premiums the assigned risk employers pay belong to the NCCI and are used to reimburse the servicing carriers for paid claims, agents’ commissions and other expenses. Because the NCCI administers this program, it establishes the rates and deposit amounts for accounts in the assigned risk pool. The NCCI also establishes uniform procedures which all servicing carriers must follow.
The pool adjusts the price of insurance in three ways:
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A lower cost tier is available to employers who have not qualified for an experience rating. The Non-Rated Premium Credit program gives non-experience rated employers a premium reduction. Also, the New Small Employer Credit gives eligible employers who have hired workers for the first time an additional premium reduction during two years of coverage in the pool. |
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A merit plan is available to employers who have not qualified for an experience rating. This plan raises or lowers the cost based on the number of workers’ compensation claims. |
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An experience rating plan is available to employers who meet size and time-in-business qualifications. This plan raises or lowers the cost of insurance based on an employer’s payroll and claim costs as compared to an “average” employer in a given industry. |
Employers insured through the pool receive coverage from insurance companies that agree to service assigned risk pool business.
SAIF Corporation is just one insurance company that has agreed to service assigned risk pool accounts. Each servicing carrier is assigned accounts on a random basis. Claim losses in excess of premium incurred by employers in the pool are shared by all the insurance companies that provide workers’ compensation coverage in Oregon.