Consumer's Guide to Insurance for Small Business Owners

PI-085 (R 11/2023) 1

Consumer’s Guide to

Insurance for Small Business Owners

This guide is designed to inform you about the different types of insurance available for small businesses, how to

buy the coverage you need, and how to file a complaint with OCI.

Wisconsin Office of the Commissioner of Insurance

125 South Webster Street, P.O. Box 7873, Madison, WI 53707-7873

p: 608-266-3585 | p: 1-800-236-8517 | f: 608-266-9935

ociinformation@wisconsin.gov |

oci.wi.gov

Disclaimer

This guide is intended as a general overview of current law in this area but is not intended as a substitute for legal advice

in any particular situation. You may want to consult your attorney about your specific rights. Publications are updated

annually unless otherwise stated and, as such, the information in this publication may not be accurate or timely in all

instances. Publications are available on OCI’s website at oci.wi.gov/Publications

. If you need a printed copy of a

publication, use the online order form (oci.wi.gov/Pages/Consumers/Order-a-Publication.aspx) or call 1-800-236-8517.

One copy of this publication is available free of charge to the general public. All materials may be printed or copied

without permission.

File a Complaint

If you have a specific complaint about your insurance, refer it first to the insurance company or agent involved. If you do

not receive satisfactory answers, contact the Office of the Commissioner of Insurance (OCI).

• Reach out to OCI (1-800-236-8517, ocicomplaints@wisconsin.gov

) to speak with our staff. If sending an

email, please indicate your name and phone number.

• File a complaint with OCI. You can file a complaint online at oci.wi.gov/complaints. If you would like to file your

complaint by mail, visit oci.wi.gov/complaints, email @wisconsin.gov, ocicomplaints@wisconsin.gov or call 1-800-

236-8517 for a form.

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Contents

Introduction ............................................................................................................................................................................................................................. 5

Business Owner’s Policy (BOP) ......................................................................................................................................................................................... 6

Property Insurance Coverage ...................................................................................................................................................................................... 6

Liability Insurance Coverage ........................................................................................................................................................................................ 7

Types of Claims Covered by Liability

............................................................................................................................................................................. 7

Single Limit Liability Coverage ......................................................................................................................................................................................... 7

Defense and Legal Costs ..................................................................................................................................................................................................... 7

Exclusions .................................................................................................................................................................................................................................... 8

Specific Industry Coverage ................................................................................................................................................................................................. 8

Other Coverages .............................................................................................................................................................................................................. 9

Business Interruption Insurance

...................................................................................................................................................................................... 9

Extra Expense Insurance....................................................................................................................................................................................................... 9

Optional Coverages ........................................................................................................................................................................................................ 9

Buying Property and Liability Insurance – Things to Consider .................................................................................................................... 10

Underwriting Process

.......................................................................................................................................................................................................... 10

Premiums ................................................................................................................................................................................................................................... 10

Deductibles ............................................................................................................................................................................................................................... 10

Building Insurance ................................................................................................................................................................................................................ 11

Business Personal Property .............................................................................................................................................................................................. 11

Business Interruption Coverage ..................................................................................................................................................................................... 11

Liability Coverage .................................................................................................................................................................................................................. 11

Report Your Loss History Accurately ........................................................................................................................................................................... 11

Discounts ................................................................................................................................................................................................................................... 11

Your Insurance Agent .......................................................................................................................................................................................................... 11

Required Coverages: Auto & Worker's Compensation........................................................................................................................................ 12

Auto Insurance ................................................................................................................................................................................................................ 12

Financial Responsibility Auto Insurance Requirements

..................................................................................................................................... 12

Physical Damage Coverage .............................................................................................................................................................................................. 13

Safety Responsibility Law .................................................................................................................................................................................................. 14

Types of Auto Insurance Policies ................................................................................................................................................................................... 14

When is the Business Liable? ........................................................................................................................................................................................... 15

Controlling Auto Loss Exposures .................................................................................................................................................................................. 16

Fleet of Vehicles ..................................................................................................................................................................................................................... 16

If You Are in an Accident ................................................................................................................................................................................................... 16

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Underwriting Guidelines for Auto Insurance ........................................................................................................................................................... 17

Worker's Compensation Insurance ......................................................................................................................................................................... 18

Benefits Payable Under Worker’s Compensation Insurance

........................................................................................................................... 18

Wisconsin Worker’s Compensation Act (Act) ......................................................................................................................................................... 18

Who is Covered by the Act? Are There Exceptions? ............................................................................................................................................ 19

Are out-of-state employers who have employees working in Wisconsin required to have a worker’s compensation

insurance policy in Wisconsin?

....................................................................................................................................................................................... 19

Must employers purchase worker’s compensation insurance? ..................................................................................................................... 20

What is Self-Insurance? ...................................................................................................................................................................................................... 20

Where to Purchase Worker’s Compensation Insurance .................................................................................................................................... 20

Penalties for Not Purchasing Worker’s Compensation Insurance ................................................................................................................ 20

Cost of Insurance ................................................................................................................................................................................................................... 21

Premium Rate Determination ......................................................................................................................................................................................... 21

Classification System in Worker’s Compensation Insurance ........................................................................................................................... 21

The Experience Rating Plan .............................................................................................................................................................................................. 22

Legal Protections in the Event of Bankruptcy ......................................................................................................................................................... 22

Where can I get more information about coverage under the Act?........................................................................................................... 23

Insuring Your Home Business ........................................................................................................................................................................................ 24

Umbrella Liability Insurance ............................................................................................................................................................................................ 25

Risk Management/Loss Control Measures ............................................................................................................................................................... 26

Impact of Implementing Loss Control Measures .............................................................................................................................................. 26

Filing a Claim......................................................................................................................................................................................................................... 26

How to File a Property Damage Claim .................................................................................................................................................................. 26

How to File a Liability Insurance Claim .................................................................................................................................................................. 27

How to File Your Motor Vehicle Claim .................................................................................................................................................................. 27

Flood Insurance ................................................................................................................................................................................................................... 28

Health Insurance .................................................................................................................................................................................................................. 28

Types of Coverage ......................................................................................................................................................................................................... 28

Group Health Insurance

Individual Health Insurance.............................................................................................................................................................................................. 29

Affordable Care Act ....................................................................................................................................................................................................... 29

Essential Health Benefits

.................................................................................................................................................................................................... 29

Open Enrollment ................................................................................................................................................................................................................... 30

Choosing a Plan .............................................................................................................................................................................................................. 30

Fee-for-Service Health Plan

............................................................................................................................................................................................. 30

Defined Network Health Plan ......................................................................................................................................................................................... 30

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Features Included in Most Health Plans .................................................................................................................................................................... 31

Requirements Applicable to All Health Benefit Plans ......................................................................................................................................... 32

Other Insurance Programs ................................................................................................................................................................................................ 33

Other Types of Policies ....................................................................................................................................................................................................... 34

Disability Income Insurance ............................................................................................................................................................................................ 34

What it Covers ................................................................................................................................................................................................................. 35

Things to Be Aware of Regarding Disability Insurance ................................................................................................................................... 35

Medical Underwriting ................................................................................................................................................................................................... 35

Underwriting Decisions

The Medical Information Bureau ................................................................................................................................................................................... 36

Buying Insurance ................................................................................................................................................................................................................. 36

Before Disaster Strikes ...................................................................................................................................................................................................... 37

Unfair Discrimination ......................................................................................................................................................................................................... 37

Small Business Resources ................................................................................................................................................................................................ 38

Glossary ................................................................................................................................................................................................................................... 39

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Introduction

When launching or running a business, it’s just as important to consider the risks as it is the rewards. To help mitigate

risks, business owners deal with a large array of

insurance needs such as property, liability, auto, worker’s compensation,

health, and disability insurance. This publication is designed to tell you about the different types of insurance available,

how to buy the

coverage you need, and how to file a complaint with the Office of the Commissioner of Insurance (OCI).

Property and liability insurance are critical coverages a small business owner needs. Property insurance protects

small business owners from losses due to damage to physical space or equipment and as a result of theft.

Liability insurance offers certain protections to a small business owner. For example, if someone falls while visiting your

business premises or a customer is hurt by a product your business sells, a liability policy can protect your business.

Property Insurance

Property insurance may be one of the most important types of insurance for financially protecting the property and

physical assets of your business. Types of property a business needs to insure include:

• Buildings and other structures, leased or owned

• Furniture, equipment, and supplies

• Leased equipment

• Inventory

• Money and securities

• Records of accounts receivable

• Improvements you made to the premises

• Machinery

• Boilers

• Data processing equipment and media,

including computers

• Valuable papers, books, and documents

• Mobile property, such as automobiles,

trucks, and construction equipment

• Satellite dishes

• Signs, fences, and other outdoor property

not attached to a building

• Intangible property (goodwill, trademarks,

etc.)

• Three types of property insurance plans:

o Basic Property Insurance Form

Generally covers losses caused by fire or lightning and the cost of removing property to protect it

from further damage (i.e., removing inventory or equipment from a damaged building so it will not

be stolen).

o Broad Form

Includes basic coverage plus coverage for “extended perils,” including windstorm, hail, explosion, riot

and civil commotion, aircraft, and vehicles that damage the property of the

insured.

o Special Form

Includes basic and broad coverage and covers all direct physical losses except conditions specifically

excluded as listed in the policy.

Liability Insurance

Liability insurance, also called Commercial General Liability (CGL), covers four categories of events for which you

could be held responsible: bodily injury; damage to others’ property; personal injury, including slander and libel;

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and false or misleading advertising. CGL coverage pays for the injured party’s medical expenses. It excludes your

employees who are covered by worker's compensation.

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

o Compensatory Damages

Financial losses suffered by the injured party and future losses they may suffer resulting from an

injury they claim in the lawsuit

o General Damages

Nonmonetary losses suffered by the injured party, such as “pain and suffering” or “mental anguish”

o Punitive Damages

Additional penalties and charges the defendant must pay

Business Owner’s Policy (BOP)

One package policy frequently purchased by small- to mid-size businesses is the Business Owner's Policy or BOP.

BOP is a package policy designed to meet the insurance needs of small offices, stores, apartment houses, and

certain types of small services and processing businesses.

The key to whether a business owner is eligible for BOP is the size of the premises, the limits of liability required,

the type of commercial operation it is, and the extent of its off-premises servicing and processing activities.

BOP includes property insurance for buildings and their contents. The package policy may also cover loss of

business income and extra expense resulting from a fire or similar insured peril. The liability section of BOP

includes coverage for bodily injury or property damage a business may be liable for.

BOP does not cover professional liability (liability

claims arising from wrongful practice by professionals), auto

insurance, worker’s compensation, health, or disability insurance. These must be purchased separately.

Property Insurance Coverage

BOP provides two basic

property coverage forms: the standard form and the special form. Both forms cover

buildings and most business property on a replacement cost basis. Replacement cost coverage is what it actually

costs to replace or restore the item without deducting for depreciation. Do not confuse replacement cost with

actual cash value. Actual cash value is usually figured out by taking the replacement cost of the item and

subtracting depreciation. For example, if your seven-year-old desk that cost $500 was damaged in a fire, it might

have depreciated 50%. Therefore, you would be paid $250 for it.

Owners of older buildings for whom replacement cost coverage may be difficult or too expensive to obtain might

consider the actual cash value option. Actual cash value is offered as an option for buildings.

The property coverage under BOP automatically includes other people’s

personal property to the extent the

business owner is legally liable for the damage.

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Liability Insurance Coverage

Defending against a legal complaint, even a minor one, is costly. The liability coverage in BOP protects the assets

of your business when it is sued for something your business did (or failed to do) that caused injury or property

damage to someone else.

Types of Claims Covered by Liability

BOP liability covers claims in four basic categories of business liability:

Liability coverage in BOP pays for medical expenses of persons, other than employees, who sustain injuries at the

insured business or as a direct result of the operations of the insured business.

Bodily Injury

Property Damage

Personal Injury

Advertising Injury

Damage to a

person’s body

or physical

wellbeing.

Damage to any type

of real estate or

personal property

such as furniture.

Damage to a person’s or

business entity’s reputation or

basic rights, such as the right to

be free from interference and to

have privacy. (Includes slander

or libel.)

The harm caused as the result of

the insured advertising its goods

or services, such as an

advertisement that slanders

another organization’s products or

services.

Liability coverage in BOP covers liability claims that stem from ownership or control of premises, products and

completed operations, and certain types of contracts. The term “premises” generally includes land, building, and

other property. This part of the policy covers claims due to failure to avoid harming customers, salespeople, or

other people (even trespassers) who are on their premises.

“Products” coverage includes claims that stem not only from the manufacture of products but also from their

distribution and sale. “Completed operations” is work that has been performed, such as the repairing of

appliances, the cleaning of chimneys, or the installation of plumbing.

However, liability insurance will not protect you against claims arising from nonperformance of a contract,

wrongful termination of employees, sexual harassment, or race and gender discrimination lawsuits. This is another

good reason to carefully read your policy.

Single Limit Liability Coverage

BOP has a single limit for liability and medical expenses with a separate medical expenses limit per person injured.

BOP also has separate limits for products/completed operations, that is, the work carried out and completed by

the business, such as repairing electrical appliances, and for advertising and personal injury, as well as a general

aggregate limit and limits per person injured and per occurrence, and limits on damage per fire.

The single limit in BOP makes decisions on how much liability protection to purchase less complicated, but it also

reduces flexibility. If your product has a higher-than-average product liability risk, such as toys, BOP might not

provide enough liability coverage.

For example, your business has chosen a $500,000 limit on liability and medical expenses and a $5,000 limit per

person injured. If your store needed additional liability coverage, you could purchase higher limits or an umbrella

or excess insurance policy.

Defense and Legal Costs

BOP obligates the insurer to provide a defense and pay for various legal costs when there is a covered liability

claim or lawsuit against the insured business owner and the claim is covered by the policy. This provision not only

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protects a business from legal expenses, but it generally makes available a more expert defense than the business

would be able to afford on its own.

Exclusions

The most important

exclusion is the exclusion for injury and property damage that is intended or expected by the

policyholder. For example, if you distributed a letter that you knew contained misleading or disparaging

information about a competitor with the intent to put them out of business, the policy would not cover the

competitor’s claim for damages.

BOP excludes liability for exposures that are covered under other insurance such as worker’s compensation and

professional and auto liability insurance policies.

Claims resulting from damage to the property of others in the business owner’s care, custody, and control are

excluded because coverage for such damage is covered under property policies.

Losses relating to contracts or agreements, injuries caused by exposure to nuclear radiation, and liability for injury

or property damage caused by substances that pollute the environment are excluded.

BOP also excludes all coverage for pollution claims. If you need liability coverage for environmental pollution, you

must purchase a special policy. Ask your agent or insurance company to discuss coverage options.

Manufacturers of products subject to recall, such as food items or toys, should consider purchasing a special

policy to cover this exposure. Products are excluded from BOP policy because of the cost of a recall.

Coverage for administering certain kinds of professional services or failure to render such services may be

excluded from BOP, depending on the extent of services provided.

Legal actions that do not involve a claim for bodily injury, property damage, personal injury, or advertising injury

are not covered. BOP does not cover most contract disputes, actions by governmental agencies charging a

business that failed to follow regulations or statutes, or pollution charges.

A claim for back taxes or a penalty for failure to provide a safe workplace is not covered by BOP.

Ask your agent to explain anything about the policy you do not understand and to answer any other

questions you might have. You should know what the policy does and does not cover, including any

deductibles

or coinsurance requirements, exclusions, exceptions, or limitations, how and when to make a claim, and how

claims are processed.

Specific Industry Coverage

Certain categories of small businesses, such as restaurants, wholesalers, florists, garages, etc., would not be

eligible for a BOP, regardless of size, because they have specialized insurance needs. Many insurance companies

offer specifically designed policies that usually include specialty coverage that is advantageous to those

businesses. For more information, contact your agent or members of your trade association.

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Other Coverages

Business Interruption Insurance

This provides coverage if the business premises, vital business equipment, or other business property becomes

unusable because of a fire, explosion, or similar covered property peril. As a result, most businesses will suffer:

• loss of net profit that would have been earned.

• payments for expenses that continue even though the business is not operating normally (e.g., debt

payments, taxes, salaries, and employees).

These losses may be covered by business interruption insurance. The purpose of business interruption insurance

is to provide the business owner with what the business itself would have done if there had been no loss. Business

interruption insurance is included in BOP but may also be purchased as an

endorsement to the fire policy.

Extra Expense Insurance

This provides coverage for a business to continue operating regardless of the extent of damage to its property.

Many businesses can resume operations fairly rapidly but may incur extra expenses by relocating to temporary

facilities, buying or leasing replacement equipment, supplies, furniture, and machines, quickly getting in new

merchandise, and notifying clients and customers of the move. Extra expense insurance provides coverage for

these increased costs of resuming business.

Optional Coverages

Insurance companies have designed package policies for businesses so all major property and liability exposures

are covered in a single policy. You can add a variety of coverages to the basic package for an additional

premium

through an endorsement that adds clauses to the insurance contract.

• Outdoor Signs

BOP covers only signs attached to the building itself. The optional coverage applies to signs located on other

parts of the building.

• Exterior Grade Floor Glass

The coverage for exterior grade floor glass refers to glass at ground or basement level with an exterior or

outside exposure.

• Money and Securities

The money and securities option provides all-risk coverage for valuables wherever they are—at the bank, at

the business owner’s or another person’s home, on the business premises, or in transit between these places.

You choose the coverage limits you need.

• Crime Insurance

Crime insurance protects businesses from theft and malicious damage, such as employee embezzlement.

• e-Insurance or Internet Business Insurance

e-insurance covers web-based businesses for damages caused by computer hackers and viruses.

• Employee Dishonesty

The employee dishonesty option provides coverage for loss of business property, including money and

securities, due to employee theft, embezzlement, fraud, or any other criminal act on the part of an employee.

You choose the coverage limits you need.

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• Mechanical Breakdown

The mechanical breakdown option provides the same kind of protection available under a separate boiler and

machinery policy.

o A boiler and machinery policy provides specialized coverage for machinery and power-producing

equipment (see below). Coverage is provided for losses resulting from the breakdown of mechanical,

electrical, and pressure equipment ranging from boilers to refrigeration systems, engines,

compressors, pumps, motors, transformers, and other machinery.

 Boiler and machinery policies cover both property and liability losses as well as the

reasonable cost of making temporary repairs and expediting repair work. Property coverage

is provided not only for the equipment, but also for other property of the policyholder

directly damaged as a result of an accident.

 A boiler and machinery policy also may be endorsed to cover losses resulting from an

interruption of business following an insured accident and losses due to spoilage of specified

property, such as food and other perishables, from lack of power, heat, steam, light, or

refrigeration resulting from an insured accident.

• Contingent Liability, Demolition Costs, and Increased Cost of Construction

Coverage for demolition costs and increased costs of construction to comply with building codes protects the

business owner from expenses to reconstruct property to comply with building ordinances.

An important consideration when selecting these coverages is how much potential damages you can afford to pay

yourself without crippling your business’s operations. The value of an outdoor sign, for example, may be so low and

the likelihood of damage so minimal it is not worth taking out insurance to cover it. You can save money by taking

higher deductibles on the coverages you do decide to purchase.

Buying Property and Liability Insurance – Things to Consider

Underwriting Process

Insurance companies decide the types of risks they will accept. This is referred to as

underwriting and is the

process by which an insurer selects and classifies risks according to their degree of insurability.

Premiums

The premiums charged for business insurance vary widely from company to company. It pays to shop around to

obtain the best value for your insurance dollar. Insurance premiums are dependent on a number of factors,

including location, age and type of building, use of the building, local fire protection, choice of deductibles,

application of discounts, and the amount of insurance you purchase.

Deductibles

The cost of your insurance is directly linked to your policy’s deductible amount. The deductible is the amount of

money that you agree to pay as part of a claim before your insurer pays the remaining amount toward the claim.

Deductibles reduce costs because you pay the first $250 or $500 of every loss.

Since you are actually “self-insuring” for the deductible amount, you should ask if the savings is worth it. It is a

good idea to get quotes for various deductibles before making your selection. Deductibles may apply separately

PI-085 (R 11/2023) 11

to each building covered or to personal property in each building, with an aggregate deductible for any one

occurrence.

Building Insurance

What will it really cost to replace your building in the event of loss from a fire or tornado? Are there building

upgrades that are required by law when you rebuild (e.g., fire sprinklers may need to be installed) and what will

they cost? Does the policy you are considering cover the extra cost to meet current building code requirements?

Business Personal Property

Every business owns some personal property that could suffer a loss. What would it cost to replace all of your

furniture, fixtures, inventory (minimum and maximum values during the year), and building upgrade (if you lease)?

Business Interruption Coverage

You need to consider how long it would take to restore your business operations in the event of a fire. Where

would you temporarily resume operations? What expenses could you discontinue while repairs are being made?

Liability Coverage

You should check your lease and other legal contracts you have signed to see what and how much liability

coverage the contracts require you to carry. You may want to get price quotes for limits of insurance beyond what

you are required to purchase according to your contractual obligations so you can see what higher amounts of

coverage will cost. You may decide to either buy all the liability coverage you can afford, or you may only want

what is required. Many people buy what makes them comfortable for a price they can afford.

Report Your Loss History Accurately

Failure to accurately report past losses could allow an insurance company to legally deny your claim and not pay

you for the loss. It is important to disclose any lawsuits in which you have been named as a party and for which

insurance coverage was provided. Also, be sure to include any property claims you have had such as those for

fires, thefts, or vandalism.

Discounts

Discounts may be available if you have sprinklers, burglar alarms, and security cameras. Make sure you tell your

agent about any upgrades or renovations done to the building, particularly to the roof, heating, electrical, and

plumbing systems.

Your Insurance Agent

Your insurance agent should fully review the types of business property you own and use, to determine what

kinds of property insurance you need. There is no sure answer about how much liability insurance to buy for a

particular business. You should consider the degree of risk in the business itself. Your insurance agent can help

you determine a satisfactory limit of coverage for your specific business.

Ask your agent to explain anything about the policy you do not understand and to answer any other questions

you might have. You should know what the policy does and does not cover, including any deductibles or

coinsurance requirements, exclusions, exceptions, or limitations, how and when to make a claim, and how claims

are processed.

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Required Coverages: Auto and Worker's Compensation

Wisconsin law requires all business owners to purchase certain types of liability coverage or show proof of

financial responsibility. What follows is a description of these required coverages.

Auto Insurance

Most businesses today operate with a motor vehicle. If the vehicles are damaged in an accident or stolen, the

business has to repair or replace them. If there is an accident and the business is at fault, the business may be

subject to large claims from people injured in the accident. A business auto insurance policy helps to cover both

property and liability risks businesses face because of the ownership or use of autos and trucks.

An auto is defined as any motor vehicle designed for primary use on the road. This includes all types of trucks and

trailers pulled by trucks.

The insured is the person or entity who holds

title to the vehicle. Owners of small businesses often use the same

vehicles for both personal and business purposes. Problems may occur if the insurance is not written in the name

of the person or entity with title to the vehicle. For example, John Smith owns the XYZ Company that owns the

vehicle that Smith drives for both business and pleasure. Smith told his insurance agent he owned the car so the

agent put Smith’s name on the auto insurance policy and not the company’s name. Smith is involved in an

accident. There may be problems when he attempts to collect on an insurance claim to repair the damage to the

car because the insurance policy requires the owner of the vehicle to be the principal insured.

Financial Responsibility Auto Insurance Requirements

isconsin has a financial responsibility law. It is designed to make sure any motorist licensed to drive in

Wisconsin has insurance or enough money to pay for damages to others that may be caused by a motor vehicle.

These requirements may be met through insurance. Details are available at the Department of Transportation

(wisconsindot.gov), Division of Motor Vehicles, Hill Farms State Office Building, 4822 Madison Yards Way, P.O. Box

7910, Madison, Wisconsin 53707-7910.

Your au

to policy must contain three major parts—liability insurance for bodily injury, liability insurance for

property damage, and uninsured motorist coverage.

Your auto policy must provide the following minimum liability coverage:

• $25,000 for injury or death of one person

• $50,000 for injury or death of two or more people

• $10,000 for property damage

The law also requires uninsured motorist coverage of $25,000/$50,000 for bodily injury only.

• Injury Liability Insurance

Bodily injury liability insurance does not protect you or your car directly. If you cause an accident injuring

other people, it protects you against their claims up to the stated amounts for medical expenses, lost

wages, pain and suffering, and other losses. It will also usually pay if the accident was caused by a member

of your family living with you or a person using your auto with your consent.

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• Property Damage Liability Insurance

Property damage liability insurance pays for any damage up to the stated amount you cause to the

property of others such as a crushed fender, broken glass, or a damaged wall or fence. Your insurance will

pay for this damage if you were driving your auto or if it was being driven by another person with your

consent.

• Uninsured Motorist Coverage

Uninsured motorist coverage applies to bodily injury you, your family, and other occupants of your vehicle

incur when hit by an uninsured motorist or hit-and-run driver. It also covers you and your family if injured

as a pedestrian when struck by an uninsured motorist or hit-and-run driver. It protects you by making sure

money is available to pay for your losses caused by someone else.

Uninsured motorist coverage does not cover your property damage and does not protect the other

driver. Your insurance company may sue the other driver for any money the company pays you because of

the other driver’s negligence.

• Underinsured Motorist Coverage

This is an optional coverage that increases the personal injury protection to you and the people in your car

up to the amount of coverage you purchase. It becomes effective when the party causing an accident has

lower limits than you purchase and the accident costs more. The maximum dollars paid is then the

difference between the two limits.

For example, assume the underinsured motorist (UIM) limits selected were $100,000 per person, and the

person causing the accident had limits of $50,000 per person. Under this scenario, you could collect up to

$50,000 from the at-fault driver and up to an additional $50,000 (the difference in limits) under your UIM

coverage. UIM coverage typically does not “add” the amount you purchased to the amount available from

the person causing the accident.

Insurers are required to notify policyholders who do not have UIM coverage of its availability. The limits of

UIM coverage, if accepted after notification, are $50,000 per person and $100,000 per accident.

• Medical Payments

This provides medical or funeral expenses for people injured or killed in your car. It also covers you and

members of your family if hit by a car or injured while riding in another car. Medical expense coverage is

usually sold as a single amount such as $1,000. Companies must offer this coverage, but you do not have to

buy it.

Physical Damage Coverage

There are three basic types of physical damage coverage for motor vehicles: collision, comprehensive, and

specified perils.

• Collision Coverage

This protects your car if your car collides with an object, including another car, or if it overturns. Your insurer

will pay for such damage even if the collision is your fault. Limits are based on the actual cash value of your

car, and it is usually written with a deductible of $100 or more.

• Comprehensive Coverage

This protects your car against almost all damage except loss caused by collision. This includes fire, theft,

missiles, glass breakage, falling objects, explosion, earthquake, civil commotion, or colliding with a wild bird

PI-085 (R 11/2023) 14

or animal. It is based upon the actual cash value of the car and can be written with a deductible. Flood

damage to your auto is covered if your auto insurance policy includes comprehensive coverage.

• Specified Perils

Because comprehensive covers so many perils, it can be very expensive. For businesses that want this broad

coverage, a less expensive alternative is specified perils coverage. This is sometimes called “fire, theft, and

combined additional coverage," or “CAC.” It covers many of the perils that comprehensive covers except

windshield damage, but it does so on a named-peril basis.

Coverage for your vehicle in an auto insurance policy is not based on replacement cost. The amount an insurance

company will pay on an auto physical damage or theft claim depends on the “actual cash value” of the vehicle.

The actual cash value of the vehicle is the replacement cost less depreciation, which most often is the current

market value at the time of loss. Therefore, the company’s obligation is to repair the car based upon its actual cash

value, not its replacement cost.

The insurance company may pay the business owner the value of the loss in money or, at its option, it may

1. repair or replace the damaged or stolen vehicle, or

2. return a stolen vehicle to the business owner with payment for any damage caused by the theft.

If you borrow money from a bank or some other financial institution to buy your vehicle, the lender will probably

require you to purchase physical damage coverage to protect both of your interests in the car.

Safety Responsibility Law

Wisconsin has a Safety Responsibility Law. The law requires that any time a person is hurt or killed, someone’s

property is damaged over $1,000, or state- or government-owned property is damaged over $200, it must be

reported as soon as possible. You must also file a Driver’s Report of Crash within 10 days with the Division of

State Patrol. If a police agency investigates the crash, you do not have to fill out the crash report. The police will.

If you are in a crash in Wisconsin, you should exchange insurance information with the other driver. Under the

Safety Responsibility Law, uninsured motorists who are in reportable crashes must show they can pay for the

damages and injuries they may have caused. The law takes away the driver’s license and vehicle registration of the

uninsured motorist who cannot pay for damages or injuries they cause.

For more information, contact:

Wisconsin Division of Motor Vehicles

Citations and Withdrawals Section – Uninsured Motorist Unit

P.O. Box 7983

Madison, Wisconsin 53707-7983

(608) 266-1249

Types of Auto Insurance Policies

• Auto Insurance for a Home-Based Business

In some cases, home-based business owners can be covered by their personal auto insurance policy.

However, depending on your particular use of your car, you may need to purchase higher coverage limits

to protect yourself and your business.

In other cases, particularly if you are transporting people for any reason in the conduct of your business,

you may need a home-based business auto policy.

PI-085 (R 11/2023) 15

Insurance companies look at the number of miles you drive, who will be driving the vehicle, your driving

record, and your claims history in order to set your premium.

The liability limits you choose and your comprehensive and collision deductibles are also major factors in

how much you are going to pay. The higher your limits, the higher your premium. Lower deductibles are

going to cost you more, too.

As a home-based business owner, you need to pay attention to liability limits in order to protect both

personal and business assets. If you cause an accident, the injured parties can go after you as an

individual and as a business owner. In order to minimize financial risk, you might consider higher liability

limits.

Many home-based businesses move equipment from job to job, like power washers and ladders for

house painters, or lawnmowers and other gardening equipment for landscapers. If you have a

homeowners or renters insurance policy, the equipment you haul from job site to job site might have

only minimal coverage.

If you permanently affix a piece of equipment, like a generator, to your vehicle, the generator will not be

covered unless you increase your insurance on your vehicle in order to cover items permanently attached.

Most importantly, if you are relying on either a personal auto insurance or personal umbrella liability

policy to provide you with protection for your company’s use of vehicles, look closely at the provisions, as

business-related liability may be excluded.

• Business Auto Insurance Policy

A business auto insurance policy covers both property and liability risks faced by a business owner

because of ownership or use of autos and trucks. A policy covering a vehicle used in business may also

cover your employees when they are operating their personal cars for your business.

The liability portion of the policy obligates the insurance company to pay up to the policy limits in the

event of bodily injury or property damage. The injury or damage must have been caused by an accident

and have resulted from the ownership, maintenance, or use of a covered auto.

When there is an auto liability lawsuit against the insured business and the loss is covered by the policy,

the insurance company is obligated to defend the business owner or settle the lawsuit. The policy leaves

the decision entirely up to the insurance company about whether to defend or settle a given claim. The

insurance company’s duty to defend or settle ends when the insurance policy limits have been exhausted

by the payment of

judgments or settlements.

There are three options for liability coverage under the business auto insurance policy: (1) autos owned

by the business; (2) all autos owned, hired, or leased; or (3) all autos, including those that are not owned,

hired, or leased. Most business owners should buy the third type of coverage to protect themselves from

liability when an employer or principal is driving a personal auto on company business.

When is the Business Liable?

An employer is generally liable for the acts of employees when they are acting within the scope of their

employment. So, when employees are driving vehicles on company business, regardless of who holds title to the

vehicle, the employer will probably be liable.

PI-085 (R 11/2023) 16

For example, if an employee takes a company-owned vehicle home at night, generally on the way to and from

home the employer is liable. However, if the employee takes that vehicle out later that night on personal errands,

the employer will usually not be liable because the employee is not acting within the scope of employment.

Controlling Auto Loss Exposures

The cause of most accidents is the driver. Employers should always check the driving records of any employees

who will drive on company business and never allow persons with a poor driving record to drive.

It should also be company policy that drivers always use seat belts. Driving safety should be frequently

emphasized, and all vehicles should be well maintained.

Premiums

Premiums for the property coverage portion of the auto insurance policy are based on business use, radius or

areas of use, and where there is a combination truck and trailer on gross vehicle weight (GVW) or gross

combination weight (GCW).

• Three Types of Business Use:

o Service use refers to vehicles used to transport people, tools, equipment, or supplies to and from a

job location.

o Retail use refers to vehicles that pick up property from or deliver it to individual households.

o Commercial use is when it does not fit under the service and retail descriptions.

• Three Radius Classifications:

o Local—fewer than 50 miles from principal point of garaging.

o Intermediate—more than 50 and fewer than 200 miles.

o Long distance—more than 200 miles.

Fleet of Vehicles

Businesses that have a fleet of vehicles will, of course, have different needs than a business with one or two.

Businesses need to be aware of how insurance policies are written for a fleet of vehicles. Some provide fleet

coverage, which means the business does not have to notify the insurance company when a new vehicle is added;

it is covered as part of the fleet. Other policies do require notice to the insurance company of a new vehicle. If the

notice is not given, the new vehicle is not insured.

If You Are in an Accident

• Call the police.

A police report can help if you have an accident or if your car is stolen or damaged by vandals. What

looks like a minor dent could be several hundred dollars worth of damage.

• Obtain information.

Write down the names, addresses, telephone numbers, and license numbers of persons involved,

including witnesses. Note the time, date, location, road conditions, make and year of vehicles involved,

PI-085 (R 11/2023) 17

insurance information, apparent damage and injuries, and your version of what happened. Make a

diagram of the accident. Your insurance company will need complete information about the accident.

• Call your agent.

Phone your agent promptly, even if you are far from home. Have your policy number ready, plus all

license numbers, phone numbers, and other information.

• Ask your agent.

Find out what documents, forms, and data you will need. If you have any questions, your agent will be

able to assist you in filling out the forms.

• Cooperate: answer all questions fully.

Your insurer may call you for more information or ask to examine your damaged vehicle. In order to

determine the extent of damage, they must have access to the vehicle.

• Take notes.

Whenever you talk with insurance company employees, your agent, lawyers, police, or others, write

down the date, times, names, and subjects you talked about. Include all decisions or promises made.

• Save receipts.

Your auto policy may pay for incidentals such as a car rental or a hotel room if your accident happens

out of town. Save copies of all documents you send or receive.

• Settling your claim.

The claim should be paid promptly after the insurer has received adequate proof of loss. If the insurer

rejects your claim or pays only part of it, you should be given an explanation for the decision.

Underwriting Guidelines for Auto Insurance

Underwriting is the process insurance companies use to select and classify an applicant’s risk. Insurers use their

own underwriting standards to determine if your business is eligible for insurance and, if so, what price you

should pay for coverage.

When you apply for auto insurance, your driving record will not only affect your

rates, it may also cause you to be

denied insurance. Wisconsin law does not permit insurers to exclude drivers by endorsement. They are permitted

to rate based on all members in the household regardless of whether they are related by blood or marriage.

Wisconsin law does not require insurance companies to extend a grace period for auto insurance premium

payments. If payment is not received by the due date, the insurance company is permitted to cancel your auto

insurance policy for nonpayment of premium.

When replacing your automobile policy with another company, be aware that the new company has 60 days to

underwrite (examine, accept, or reject) your application. This may include securing motor vehicle, credit, and claim

history reports, as well as verification of other information provided on the application. Your policy can be

canceled during the first 60 days for any adverse information, such as accidents, violations, suspensions, or prior

claims.

PI-085 (R 11/2023) 18

Worker's Compensation Insurance

Worker’s compensation is protection mandated by state law for a worker against injury and death occurring in

the course of employment. It is not health insurance, and it is not intended to compensate for disability other

than disability caused by injury arising out of employment.

The purpose of the worker’s compensation system is to provide financial and medical benefits to victims of

“work-related” injuries and their families, regardless of fault. The laws place the financial burden on the employer.

This compensation is generally the exclusive remedy for the injured employee.

Benefits Payable Under Worker’s Compensation Insurance

Worker’s compensation benefits can provide the urgently needed medical care and financial support for injured

workers and their families. Benefits may include:

• Coverage of all reasonable and necessary medical costs

• Benefits for temporary wage loss

Temporary Partial Disability (TPD) or Temporary Total Disability (TTD) are provided to sustain an

employee while recovering from an injury. Eligibility for temporary disability benefits is determined and

must be documented by a doctor. Benefits for temporary wage loss due to disability are based on two-

thirds of the employee’s wage rate up to a specified maximum amount.

• Benefits for permanent disability

Permanent Partial Disability (PPD) or Permanent Total Disability (PTD) are paid if the employee does not

fully recover from the injury. Permanent disability is awarded for the potential or actual loss of earning

capacity. The amount of benefit payment for permanent disability depends on the seriousness of the

permanent disability.

• Vocational rehabilitation

• Death benefits and burial expenses up to specific limits

Requirement

Wisconsin law requires a subject employer with employees working in Wisconsin to have worker’s compensation

insurance with an insurance company licensed to write worker’s compensation insurance in Wisconsin.

Each employer must have a worker’s compensation insurance policy. One employer cannot provide worker’s

compensation insurance coverage for another employer’s employees even when they voluntarily sign a contract

to provide the coverage. Every employer, as described in s. 102.04 (1), Wis. Stat., is required under s. 102.28 (2),

Wis. Stat., to have a worker’s compensation insurance policy.

Wisconsin Worker’s Compensation Act (Act)

(Sections 102.04 and 102.07, Wis. Stat.)

Most Wisconsin employers are required to have worker’s compensation insurance or be authorized self-insurers

under the Act. The law mandates worker’s compensation insurance for:

1. Any employer who employs three or more persons full- or part-time. This employer needs worker’s

compensation insurance immediately upon employing a third person.

PI-085 (R 11/2023) 19

2. Any employer who has one or more full-time or part-time employees and has paid gross combined wages

of $500 or more in any calendar quarter for work done in Wisconsin. This employer must have insurance by

the 10th day or the first month of the next calendar quarter.

3. Anyone engaged in farming who employs six or more employees (at one or more locations) on the same

day for 20 days (consecutive or non-consecutive) during a calendar year. A calendar year is January through

December. The farmer must have insurance within 10 days after the 20th day of employment. Some

relatives of the farmer are not counted as employees.

An employer subject to the Act may not withhold or collect any money from employees or any other person,

including independent contractors and subcontractors, to pay for worker’s compensation insurance. To do so is

illegal. Also, no agreement by an employer waiving rights to compensation is valid. [ss. 102.16 (3) and 102.16 (5),

Wis. Stat.]

Who is Covered by the Act? Are There Exceptions?

Nearly all employers in Wisconsin are covered. This includes both public and private employers. When talking

about worker’s compensation, it is easier to discuss the exceptions. There are a few classes of workers who are

covered by federal laws and are not covered by the Act. Federal government employees (such as postal workers,

veterans administration hospital employees, or members of the military) are covered by federal laws. People who

work on interstate railroads are covered by the Federal Employers Liability Act. Seamen on navigable waters are

covered by the Merchant Marine Act of 1920, and people loading and unloading vessels are covered by the

Longshoremen’s and Harbor Worker’s Compensation Act.

The only employee exceptions to the Act's insurance requirement are (1) domestic servants, (2) any person whose

employment is not in the trade, business, profession, or occupation of the employer, (3) some farm employees, (4)

volunteers, including volunteers of nonprofit organizations that receive money or other things of value totaling

not more than $10 per week, (5) religious sect members that qualify and are certified for an exemption, (6)

employees of Native American tribal enterprises, including casinos, unless the tribe elects to waive its sovereign

immunity and voluntarily becomes subject to the Act, and (7) real estate brokers, agents, and salespersons that

satisfy the two elements pursuant to s. 452.38, Wis. Stat. Contact the DWD Division of Worker’s Compensation’s

Bureau of Insurance Programs at (608) 266-1340 for an explanation of these exceptions. Virtually all other workers

and employers are subject to the Act.

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-state employers with employees working in Wisconsin must have a worker’s compensation insurance

policy with an insurance company licensed to write worker’s compensation insurance in Wisconsin.

Section 102.28 (2), Wis. Stat., requires an employer subject to the Act with employees working in Wisconsin to

have a worker’s compensation insurance policy with an insurance company licensed to write worker’s

compensation insurance in Wisconsin. The policy must be endorsed to name Wisconsin as a covered state in

section 3-A of the policy.

If an out-of-state employer has a worker’s compensation insurance policy with an insurance company not

licensed to write in Wisconsin, they must obtain a policy from a Wisconsin-licensed insurance company to cover

their Wisconsin exposure. The insurance company must file the properly endorsed policy with the Wisconsin

Compensation Rating Bureau (WCRB).

PI-085 (R 11/2023) 20

Must employers purchase worker’s compensation insurance?

The law requires that every employer subject to the Act provide some way of assuring it can pay benefits to its

workers should they become injured. Most employers in Wisconsin provide this security by purchasing a worker’s

compensation insurance policy from an insurance company. The insurance company then reports to the State of

Wisconsin Department of Workforce Development (DWD) Division of Worker’s Compensation that the company

is providing coverage for the employer.

Some employers “self-insure” with authorization from the DWD Division of Worker’s Compensation.

What is Self-Insurance?

Some employers who are financially sound are “self-insured.” An employer can only be self-insured if it obtains

permission from DWD.

DWD requires employers to demonstrate a very sound financial condition in order to be self-insured.

Where to Purchase Worker’s Compensation Insurance

• Voluntary Marketplace

There are about 300 insurance companies licensed to write worker’s compensation insurance in

Wisconsin. Contact an insurance agent to assist you in applying for insurance to the insurance company

of your choice.

If an insurance company rejects your insurance application, you should ask your agent to search the

marketplace for another company. Information on licensed insurers is available on OCI’s website at

oci.wi.gov

• Wisconsin Worker’s Compensation Insurance Pool

If coverage is not available in the voluntary market, your agent should assist you with submitting an

application to the Wisconsin Compensation Rating Bureau (WCRB).

The WCRB acts as the administrator and trustee of the Wisconsin Worker’s Compensation Insurance

Pool (Pool). The Pool is a risk-sharing plan created to provide worker’s compensation insurance to

employers that are unable to obtain coverage in the voluntary market and are entitled to such

insurance in good faith. Out-of-state employers with no Wisconsin operations and employers who owe

money to the Pool for prior policies are not eligible for Pool coverage.

All insurers licensed to write worker’s compensation insurance in Wisconsin must participate in funding

the Pool and five insurance companies have been selected to serve as servicing carriers. The insurance

company assigned to service a Pool policy writes the policy in its own name and provides claims, loss

control, auditing, and other services, just as they would for their voluntarily written policyholders.

The WCRB will assign a servicing carrier to write the policy for you. The premium cost is generally the

same for assigned coverage. Your insurance agent can provide you with further information and forms.

Penalties for Not Purchasing Worker’s Compensation Insurance

There are severe penalties for the employer that fails to have required worker’s compensation insurance coverage.

First, if a worker is injured, the employer is personally liable.

Second, the DWD Division of Worker’s Compensation actively enforces the Act. The Division of Worker’s

Compensation has the authority to close a business until proper worker’s compensation insurance is obtained.

PI-085 (R 11/2023) 21

By law, a penalty is imposed on an employer for failing to have worker’s compensation insurance coverage where

required. The normal penalty is twice the amount of premium not paid during the uninsured time period or $750,

whichever is greater. An employer who has an illegal lapse in worker’s compensation insurance of seven

consecutive days or less can be subject to a penalty of $100 for each day they are uninsured provided 1) the

employer has not previously been penalized for not having worker’s compensation insurance coverage and 2) no

injury that the employer is liable for under s. 102.03, Wis. Stat., occurred during the uninsured period. If the illegal

lapse is greater than seven days, the normal penalty assessment will apply.

In addition to the penalty, uninsured employers are personally liable for benefits and do not have the normal

exemptions of property from seizure and sale on execution of a judgment. Officers and directors of uninsured

corporations are personally liable for benefits owed by the corporation. Other penalties may apply depending

upon the situation. [Sections 102.82 (2) (a), 102.82 (2) (ag), and 102.28 (5), Wis. Stat.]

Cost of Worker’s Compensation Insurance

The cost of worker’s compensation insurance will vary depending on the type of business and the payroll.

Employers are classified for worker’s compensation insurance purposes by the predominant business and not the

specific job.

For example, in a manufacturing situation, the product manufactured determines the business of the insured

employer. In other words, a company that manufactures cars would be classified as an automobile manufacturer.

There are many kinds of jobs involved in making cars, and some jobs are more hazardous than others.

Nonetheless, all of these jobs are being performed for an employer engaged in the business of manufacturing

automobiles. Therefore, all of the employees’ payrolls would be classified in the same classification.

Premium Rate Determination

The WCRB sets the premium rate for each classification with the approval of the commissioner of insurance. If you

feel your business is not properly classified or the premium charged is not proper, you can appeal to the WCRB

for a review of your situation. If you are still not satisfied with the WCRB’s decision, you may send a written

request to the commissioner of nsurance for a hearing to review the WCRB’s decision. [Section 626.31, Wis. Stat.]

Classification System in Worker’s Compensation Insurance

One object of the worker’s compensation system is to group similar employers together so each classification

reflects common losses. Since losses vary widely by business or industry, charging the statewide average rates

would result in some employers paying too high a premium and other employers paying less than their fair share.

Accordingly, employers are classified by the business or industry in which they operate to reflect the variation in

loss costs. Generally, similar businesses have similar exposures to occupational injury and disease, even though no

two businesses are identical.

Each classification combines the payroll and losses of similar employers to develop a price for the insurance

protection. Worker’s compensation insurance uses approximately 500 business classifications for premium

purposes.

Three occupations are common to so many businesses that special classifications have been established for them.

These “standard exception” classifications cover clerical office employees, outside salespeople, and drivers. The

standard exception classes are the only classifications that are not related to the business of the employer.

Instead, they are related to the job as these jobs are common to many employers.

PI-085 (R 11/2023) 22

Experience Rating

The Experience Rating Plan offers a method for modifying the cost of worker’s compensation insurance for all but

the smaller employers to match the characteristics of an individual employer. Experience rating groups all

insureds according to their business operations or classification, adds together the losses of the groups, and

obtains an average cost for the groups.

For experience rating in worker’s compensation insurance, the actual losses of the individual employer are

determined over a period of time, usually three years. The losses are capped, which makes the frequency—not

severity—of losses more important for determining experience rates. This experience is then compared or

contrasted with the average as reflected by the rate or rates that apply to the employer’s business. If the

employer has better than average costs, the employer receives a credit, and employers with poorer than average

experience receive a debit. Experience rating takes average loss experience (rates) and modifies it by the

individual employer’s own loss experience.

Legal Protections in the Event of Bankruptcy

There are two provisions in the law to protect workers in the event of bankruptcies:

• Self-Insured Employers Liability Fund

The Self-Insured Employers Liability Fund is funded by assessments self-insured employers. Should a

self-insured employer go bankrupt, the Self-Insured Employers Liability Fund has the responsibility for

making payments to injured workers. Should this occur, it is very important the injured worker give

notice of their claim to the Self-Insured Employers Liability Fund immediately.

• Wisconsin Insurance Security Fund

Every state has a safety net to protect insurance consumers from financial loss in the rare instance an

insurance company becomes insolvent. This safety net is called a “guaranty fund.” The guaranty funds

are established by state law and are composed of licensed companies in the state. They pay the claims

of policyholders and other claimants of an insolvent insurance company. The money to pay the claims

against the insurance company comes from assessments made against all of the insurance companies

that are members of the guaranty fund.

In Wisconsin, the fund is called the Wisconsin Insurance Security Fund (Fund). The Fund is created by

state law and is funded by assessments of insurers licensed to do business in Wisconsin. In general, the

Fund protects residents for most claims of licensed insurers in liquidation. The Fund should not be

relied upon to eliminate all risks of loss to insureds due to insurer insolvency. Some types of policies

may not be fully covered and significant delays could occur in settling obligations in cases of

liquidation.

Questions about the coverage and limitations of the Fund may be addressed to:

Wisconsin Insurance Security Fund

wilifega.org

(608) 242-9473

2820 Walton Commons Lane, Suite 135

Madison, WI 53718-6797

PI-085 (R 11/2023) 23

Where can I get more information about coverage under the Act?

Contact the Department of Workforce Development (DWD) Division of Worker’s Compensation for more

information regarding the Worker’s Compensation Act. The DWD Division of Worker’s Compensation Division can

be contacted by phone at (608) 266-1340. Information is available online at dwd.wisconsin.gov/wc

The Worker’s Compensation Act is available online at dwd.wisconsin.gov/dwd/publications/wc/wkc_1_p.pdf.

Printed copies can also be purchased through Document Sales at docsales.wi.gov. Contact Document Sales at

(800) 362-7253 for more information about ordering this publication.

Division of Worker’s Compensationat the Department of Workforce Development (DWD)

dwd.wi.gov

(608) 266-3131 Phone

(608) 267-0394 Fax

Office Location:

201 East Washington Avenue, Room C100

Madison, WI 53703

Mailing Address

P.O. Box 7901

Madison, WI 53707-7901

Contact the Division of Worker’s Compensation

for:

• All injury/claim questions

• All Worker’s Compensation Act

questions

• Compliance questions

• Corporate officer options questions

• Enforcement questions

• Penalty/penalty payment questions

• Self-insurance questions

• Divided insurance questions

• Wrap-up policy questions

• Withdrawal questions

Wisconsin Compensation Rating Bureau (WCRB)

wcrb.org

(262) 796-4540 (Phone)

(262) 796-4400 (Fax)

Office Location:

20700 Swenson Dr., Suite 100

Waukesha, WI 53186

Mailing Address:

P. O. Box 3080

Milwaukee, WI 53201-3080

Contact WCRB for:

• Wisconsin Worker’s Compensation

Insurance Pool questions

• Premium determination questions

• Rate questions

• Classification questions

• Inspection questions

• Audit questions

• Experience modification questions

• All questions regarding the proper

filing of policies and endorsements

pertaining to Wisconsin coverage

• Insurance company filing questions

• Endorsement filing questions

• Questions regarding appeal rights of a

WCRB decision

• Questions about statistical reporting

PI-085 (R 11/2023) 24

Office of the Commissioner of Insurance (OCI)

oci.wi.gov

1-800-236-8517 (Phone)

(608) 264-8115 (Fax)

Office Location:

125 South Webster Street

Madison, WI 53703

Mailing Address:

P.O. Box 7873 Madison,

WI 53707-7873

Contact OCI for:

• All questions relating to the insurance

laws

• Questions related to the licensing and

regulation of insurance companies and

agents

• Unfair claim settlement practices

questions

• Unfair marketing practices questions

• Worker’s compensation rate

regulation questions

• Worker’s compensation dividend plans

questions

• Questions related to the licensing and

regulation of WCRB

Insuring Your Home Business

If you operate a home business full- or part-time, you might be uninsured and not realize it. Many home business

owners believe their homeowners insurance policy covers all their home business needs. You should not assume

your homeowners insurance policy will cover your home business. Your homeowners policy may provide

coverage but probably only to a maximum of $2,500 for business equipment in the home and $250 away from

the premises.

Your homeowners policy usually does not cover business-related liability, for example, if a customer or supplier is

injured on your property. A homeowners policy also does not insure your inability to collect your accounts

receivable if your business records are damaged, and your policy will not replace lost income if you cannot

operate your business due to damage to your home.

There are three ways you can buy home business coverage:

• Depending on your home business, you may be able to add an endorsement to your existing

homeowners insurance policy. For example, some insurers offer a home daycare endorsement for

people who operate a home daycare service for pay in their home.

• You may also be able to buy several individual business insurance policies to provide the various

coverages you need, such as business property, general liability, and business income coverage.

• Some insurance companies have begun to offer what amounts to a mini-business owner's package

policy specifically for home businesses. Some of these policies cover the loss or destruction of business

PI-085 (R 11/2023) 25

property on or off premises, the loss of valuable papers and important business information, personal

injury and advertising liability, accounts receivable, and money lost on-premises and off-premises (up

to any applicable policy limits).

The companies that offer these policies often require you to purchase your homeowners and auto insurance

policies from them. With these policies in place, your home business policy extends to your business the amount

of personal property and liability coverage you have on your home. If a fire or storm makes running your business

impossible, your insurance will cover expenses and lost income for up to a year.

Discuss your home business insurance needs with your agent to buy the policy that best fits your needs.

Umbrella Liability Insurance

Umbrella policies cover all underlying liability policies. Umbrella policies are designed to cover large, infrequent

losses, for example, the total cost of claims that may result from a collision with a school bus. To decide whether

you need an umbrella policy, think of the most extreme situations. For instance, imagine a roof caving in under

the weight of a once-in-a-100-year snowstorm and the total cost of the claims produced if there were many

people in the vicinity. Then compare the amount with the limits of your current liability policies.

Umbrella liability insurance provides two kinds of coverage:

• Payments of liabilities in excess of the policy limits for an insured’s basic commercial general liability or

employers’ liability coverage

• Liability for areas not covered in other liability policies

An umbrella policy offers you extra liability insurance that pays for a loss when the limits of your underlying policy

are reached. For example, if you are found liable for someone’s injury that required $150,000 of medical

treatment and the liability limit in your underlying policy is $100,000, your umbrella policy will pay the additional

$50,000.

Also, there are some situations a standard policy does not cover, such as libel and slander. An umbrella liability

policy enables people to protect themselves against catastrophic lawsuits in such situations.

Umbrella policies are sold with a variety of limits, commonly $1 million or $5 million. The underlying policies

provide the first dollars in a liability claim and the umbrella is available to any remaining amounts until the

amount paid by all policies reaches the umbrella limit.

Umbrella liability policy coverage usually protects policyholders wherever they travel. Many such policies will

cover legal defense costs even if the charges are proved baseless. Umbrella liability coverage has come to be in

high demand among individuals who have substantial assets and who may be especially vulnerable to lawsuits

and costly judgments.

Keep in mind most personal umbrella policies added to a homeowners or personal auto insurance policy will

cover liability stemming from business activities and business property only if covered by the basic policies.

Always check your policy to see how it defines business and business property or ask your agent.

PI-085 (R 11/2023) 26

Risk Management/Loss Control Measures

You may be able to reduce your premium through risk management. Risk management involves identifying and

analyzing ways in which you may be found liable (your “exposure to liability”) and selecting and implementing

techniques to be used to handle the exposure. You can take steps to reduce the possibility of unforeseen losses

and the impact of those that do occur, whether from fires, storms, thefts, lawsuits, or injuries.

You can:

• Conduct safety inspections and programs for training employees in first-aid methods.

• Install a sprinkler system and an alarm that automatically notifies firefighters of a fire. This may make

losses less likely or injuries less severe.

• Make sure the wiring in your building is in good shape.

• Train workers to lift heavy items properly and to wear safety masks and gloves when working with

hazardous substances.

• Keep only a small amount of cash in the cash register and deposit the rest in a floor safe that cannot be

opened by employees.

• Store inventory in two locations so if there is a loss all the inventory will not be destroyed.

• If you lease out part of your premises, you might require your tenant to protect you from liability claims

of people they allow in the building.

• Make sure all your drivers have good driving records. The cause of most accidents is the driver. You

should always check the driving records of any employees who will drive on company business and

never allow a person with a poor driving history to drive.

This list is far from complete. Ask your agent or insurance company if they have brochures or publications on loss

control topics.

Impact of Implementing Loss Control Measures

Implementing loss control measures may make it less likely you will be found liable or, if you are found liable, that

damage will be large. Because premiums are based on how much insurers pay out in claims, an increase in claim

costs also means an increase in your premiums.

Businesses with very good loss control measures and claims histories will often pay lower insurance premiums

than those with less effective loss control measures and practices. A business with a really poor loss control

history may also have difficulty finding property insurance.

Talk to your agent about which risk management techniques you can use that may reduce your premiums.

Filing a Claim

How to File a Property Damage Claim

If your business is hit by a fire, accident, or theft, your insurance policy lists the steps you must take. The following

tips will make it easier for you to go through the claims process.

1. When a fire, accident, or theft occurs, call your agent or insurance company at once. Report any burglary or

theft to the police.

PI-085 (R 11/2023) 27

2. Take reasonable steps to protect your property from further damage.

3. If you need immediate repairs, save the damaged parts. The claims adjuster may be interested in examining

them. If saving them is not practical, call the claims manager at your insurance company.

4. Get at least two bids for repairs. This will speed up the processing of your claim. Get estimates on the cost

to repair or replace the damaged property. Bids should include:

• a list of parts that have to be replaced and the reason for replacing them.

• straight time labor costs.

• overtime labor costs. Do not forget to include any costs you or your employees incur while repairs are

being made.

5. If you are filing a business interruption claim, you will have to show how much business you conducted,

both before and after the loss. Keep detailed records of business activity and extra expenses during the

interruption period. Keep current copies of these records off the business premises so they will not be

destroyed by fire. Do everything you can to minimize the amount of loss.

6. If you need help, call your agent or your insurance company’s claims manager.

How to File a Liability Insurance Claim

Business owners have a contractual obligation to inform the insurance company or agent as soon as they become

aware there is or could be a liability claim. The insurance policy contains a “reporting clause” that specifies the

time an insured has to file a claim. With a standard general liability insurance policy, it is recommended a claim be

reported as soon as you know of a loss.

You should report all liability claims to the insurance company as soon as possible. Your report should include:

• The details of how, when, and where the accident took place.

• The names and addresses of any injured persons and witnesses.

• All copies of any demands, notices, summonses, or legal papers received in connection with the claim

or suit.

• An authorization for the insurance company to obtain records and other information.

Your policy requires you to cooperate with the insurance company in the investigation, settlement, or defense of

the claim or suit.

Unless all of the terms set out in the policy have been fully complied with, it may make it difficult to collect from

the insurance company.

How to File Your Motor Vehicle Claim

If your company car or truck is involved in an accident, damaged by fire, flood or vandalism, or stolen, follow

these steps in filing a claim.

• Call your agent or insurer as soon as possible. Ask what forms or documents will be needed to support

your claim. Your insurer may require a “proof of loss” form, as well as documents relating to your claim.

These may include medical and repair bills, and a copy of the police report.

• Supply the information your insurer needs. Cooperate with the investigation, settlement, or defense of

any claim, and provide copies of any legal papers you receive in connection with your loss. Your insurer

PI-085 (R 11/2023) 28

will represent you if a claim is brought against you and defend you if you are sued for a claim covered

by the policy.

• Keep records of expenses you may incur as a result of the accident. You may be reimbursed for them

because of your policy. If the accident occurs while employees are conducting insurer-related business

activities, your worker’s compensation policy will cover the workers’ medical expenses and loss of

income.

• Keep copies of all paperwork for your own files. You may need them later.

Flood Insurance

Flood insurance is available through the National Flood Insurance Program (NFIP). To qualify for the NFIP, you

must live in a designated community and comply with the government guidelines for flood prevention. Most

areas in Wisconsin qualify. Your agent should be able to find out if you are eligible.

For general information on the flood insurance program, you may call or write:

Federal Emergency Management Agency (FEMA)

500 C Street SW Washington, DC 20472

1-800-621-FEMA

1-800-462-7585 TTY

floodsmart.gov

Health Insurance

Wisconsin insurance law defines a small employer as an employer with at least 2 but not more than 50

employees. Small employers can choose whether to offer or provide health insurance to their employees.

However, if you decide to offer group health insurance to your employees, you must offer the coverage to all

employees working 30 or more hours and to their dependents. Your insurance agent or broker can advise and

assist you on coverage options and their cost.

Types of Coverage

Group Health Insurance

Group health insurance provides coverage to individuals under a single master policy issued to the group policy

owner. Certificates of insurance are provided to the individuals. The policy owner may be an employer, an

association, a labor union, or other entity. Insurers may require minimum employee or member participation

levels to assure there are sufficient individuals in the group in good health to balance those in the group in poor

health.

Group health insurance provides several advantages:

• The premium is often partly paid by an employer or union.

• Group members are automatically eligible for the coverage.

• Group premiums are typically lower than those for comparable individual policy coverage.

PI-085 (R 11/2023) 29

Individual Health Insurance

Individual health insurance provides coverage to a specific individual or to an individual and their family under a

policy issued to that individual. Most individual health insurance policies include exclusions for work-related

injuries regardless of whether you are self-employed and even if you do not have worker's compensation

coverage.

Finding adequate coverage at an affordable price will take some effort. Start with a knowledgeable health

insurance agent who will provide reliable service. Try to get a recommendation from family or friends. We suggest

you verify that the agent or insurance company is licensed before providing personal or financial information to

them and that the agent is appointed, or authorized, to sell policies for a particular company. The OCI website

provides a lookup tool to find licensed agents and companies and verify agent appointments with companies:

https://oci.wi.gov/Pages/Consumers/Look-Up.aspx

Affordable Care Act

The federal Affordable Care Act (ACA) includes market reforms that apply to individuals and small employers who

apply for health insurance. It allows individuals and small employers to purchase health insurance from any

insurer offering coverage in the market regardless of the health status of individuals, employees, or dependents.

ACA provides that individuals, employees, and their dependents may not be subject to preexisting condition

exclusions. It also provides that health insurance rates may only differ based on employee age, composition of

family, geographic area, and tobacco use.

Small employers with fewer than 25 full-time equivalent employees and paying average annual wages of below

$50,000 may qualify for a small business tax credit to offset some of the costs of health insurance premiums. The

amount of the tax credit is based on the size of the employer’s business. The fewer employees an employer has,

the larger the tax credit the employer may be eligible for.

Essential Health Benefits

All ACA-compliant comprehensive individual and small group health insurance policies must include a set of

health care services called essential health benefits. These benefits include:

• Ambulatory patient services

• Emergency services

• Hospitalization

• Maternity and newborn care

• Mental health and substance use

disorder services, including

behavioral health treatment

• Prescription drugs

• Rehabilitative and habilitative services

and devices

• Laboratory services

• Preventive and wellness services and

chronic disease management

• Pediatric services, including oral and

vision care

In addition to health care services in these categories, all of Wisconsin’s mandated benefits are considered

essential health benefits and must be covered by ACA-compliant comprehensive individual and small group

health insurance policies. Information on Wisconsin mandated benefits is available in the OCI publication Fact

Sheet on Mandated Benefits in Health Insurance Policies: oci.wi.gov/Pages/Consumers/PI-019.aspx

Essential health benefits must be covered with no annual or lifetime dollar limits.

PI-085 (R 11/2023) 30

Open Enrollment

ACA provides for an annual open enrollment period. The open enrollment period for coverage in 2023 is Nov. 1,

2022 – Jan. 15, 2023. In addition, the ACA provides for special enrollment periods if you experience certain life

events, including losing health coverage, moving, getting married, having a baby, or adopting a child.

Small employer health insurance is available in Wisconsin from several insurers and

defined network plans. OCI

offers a publication meant to help small employers understand their options and to provide a

comparison of premium rates available in the small employer health insurance marketplace. Read the Health

Insurance for Small Employers and their Employees available on OCI’s website

oci.wi.gov/Pages/Consumers/PI-

206.aspx or call 1-800-236-8517 to request a copy.

Choosing a Plan

Choosing a health insurance plan is like making any other major purchase. You choose the plan that meets both

your needs and your budget. For most people, this means deciding which plan is worth the cost. Plans differ, both

in how much you have to pay and how easy it is to get the services you need.

Health insurance plans are usually described as a

fee-for-service health plan or a defined network health plan. A

defined network plan is the term used in Wisconsin insurance law to refer to any health benefit plan that creates

incentives for its enrollees to use

network providers. A fee-for-service health plan allows you to use any doctor,

hospital, or other provider you choose. Although these plans offer the greatest freedom to select any doctor, they

are usually more expensive than plans that limit choices. Defined network health plans usually cost you less, but

you have less freedom of choice.

Cost is not the only thing to consider when buying health insurance. You also need to consider what benefits are

covered. You should compare plans carefully for both cost and coverage.

While fee-for-service and defined network plans differ in important ways, in some ways they are similar. Both

cover an array of medical, surgical, and hospital expenses. Most offer some coverage for prescription drugs, and

some include coverage for dentists and other providers. But there are many important differences that will make

one or the other form of coverage the right one for you.

Fee-for-Service Health Plan

Under a fee-for-service health plan (also known as an

indemnity plan), you are free to seek necessary medical care

from any doctor and hospital you wish. The doctor often bills the insurance company directly for the services

provided, and the insurance company pays for the items covered by the policy. In some cases, you will have to fill

out claim forms and send them to the insurance company. This type of health plan offers the most choices of

doctors and hospitals.

Defined Network Health Plan

Some defined network plans will provide coverage only if the enrollee uses network providers and other plans will

pay a larger portion of the charges if the enrollee uses network providers. Health maintenance organizations,

point-of-service plans, and preferred provider plans are examples of defined network plans. These types of plans

are sometimes referred to as

managed care plan.

• Health Maintenance Organization (HMO)

HMO is a health insurance plan that provides comprehensive, prepaid medical care. It differs from a

traditional insurer in that it both pays for and provides the medical care. Persons insured by an HMO

PI-085 (R 11/2023) 31

plan are referred to as enrollees. An HMO usually operates on a closed-panel basis. This means

enrollees are required to seek care from a medical provider who is either employed by or under

contract with the HMO.

HMOs limit care to a specific geographic area. Except for serious emergencies outside the

service area,

the HMO will probably not pay for care enrollees receive from a provider who is not affiliated with the

HMO unless the HMO physician refers you to that provider.

• Point-of-Service Plan (POS)

POS plan is essentially an HMO that allows members to use services provided outside of the network

without prior approval from a network doctor. POS plans offer lower deductibles and coinsurance for

visits to doctors inside the network. Visits outside the network normally require the payment of

deductibles and coinsurance.

• Preferred Provider Plan (PPP)

PPP is a form of managed care closest to an indemnity plan. A PPP has arrangements with doctors,

hospitals, and other providers of care who have agreed to accept lower fees from the insurer for their

services. A PPP pays a specific level of benefits if certain providers are used and a lesser amount if non-

PPP providers are utilized. A PPP must provide reasonable access to network providers in the service

area. However, a PPP is not required to offer a choice of participating providers in each geographic

area.

PPPs may require enrollees to pay coinsurance of up to 50% for services provided by nonparticipating

providers. Enrollees should carefully read their policies before seeking services from nonparticipating

providers.

A PPP operates in a certain geographic area and is limited to specific providers. A PPP that has a

provider agreement with a hospital may not have an agreement with every provider who provides

services at the hospital, such as anesthesiologists, pathologists, and radiologists.

Many insurers that offer standard health insurance policies also offer some type of preferred provider

plan. You should ask your agent to provide you with information on preferred provider plans in your

area.

Features Included in Most Health Plans

• Deductible

The deductible is the dollar amount you must pay each year before the insurance company pays its

share. If you are buying coverage for your family, ask how the family plan works. Family plans may have

family and individual deductibles that need to be paid before the health plan pays towards your

family’s medical expenses.

Read the policy carefully. Some policies require you to pay a deductible on a calendar year basis or on

a per sickness or injury basis.

• Coinsurance

Coinsurance is your share or the percentage of covered expenses you must pay in addition to the

deductible. Coinsurance applies to each person and starts over again each year. Sometimes the policy

will cover all expenses after an

out-of-pocket limit is reached.

PI-085 (R 11/2023) 32

• Copayment

copayment is your share or a fixed amount you must pay for covered expenses in addition to the

deductible. The amount can vary by the type of covered medical expense.

• Out-of-Pocket Limit

Many plans have an out-of-pocket limit. The out-of-pocket limit is the maximum dollar amount you

pay for covered services and supplies during a specified period—generally a calendar year. Charges for

services by non-network providers not paid by an insurer do not count toward the out-of-pocket limit.

Most small group plans define deductibles, coinsurance, and copayments as part of out-of-pocket

maximums. Once the out-of-pocket maximum is paid, benefits are paid at 100% of the covered costs

incurred after that time.

• Medically Necessary

Every health insurance policy contains a provision that allows insurance companies to evaluate whether

a service or treatment is “

medically necessary” for treating a patient and whether it could adversely

affect the patient’s condition if it were omitted. Insurance companies may deny payment for a

treatment that does not meet the plan’s medically necessity guidelines. Most health benefit plans often

require a review before certain medical procedures are done.

• Usual, Customary, and Reasonable Charge

Most insurance companies do not use your actual bills to calculate their payments. Companies have

their own fee schedule, such as a usual, customary, and reasonable (UCR) fee schedule. The UCR fees

are typical amounts paid for everything from a doctor’s visit to heart surgery.

For example, if your doctor charges $10,000 for an operation while most doctors in your area charge

only $8,000, you may be billed for the $2,000 difference. This is in addition to the deductible and

coinsurance you would be expected to pay. To avoid this additional cost, ask your doctor to accept

your insurance company’s payment as full payment, or shop around to find a doctor who will.

Otherwise, you will have to pay the difference.

• Exclusions and Limitations

There are some services plans will not cover—usually because they are not considered medically

necessary. In addition, some services may be limited. You should review each plan’s exclusions and

limitations. Keep in mind that you have to pay the full cost of care not covered by your plan.

Requirements Applicable to All Health Benefit Plans

• Emergency Care

Every health care plan offered in Wisconsin that covers emergency care, including defined network

plans, must cover services required to stabilize a condition most people would consider to be an

emergency, without

prior authorization. Defined network plans are permitted to charge a reasonable

copayment or coinsurance for this benefit.

• Grievance Procedure

All health insurance plans are required to have an internal

grievance procedure for you to use if you are

not satisfied with the service you receive. The procedure must be set forth in the insurance contract and

must also be provided in written notice.

PI-085 (R 11/2023) 33

The health insurance plan must provide you with complete and understandable information about how

to use the grievance procedure. You also have the right to appear in person before the grievance

committee and present additional information.

You may wish to first contact the health insurance plan with a question or complaint. Many complaints

can be resolved quickly and require no further action. However, filing a complaint with the plan first is

not required. You can file a complaint with the appropriate state agency instead of, before, or at the

same time as filing with the health insurance plan.

Health insurance plans are required to have a separate expedited grievance procedure for situations

where the medical condition requires immediate medical attention. The procedure requires health

insurance plans to resolve an expedited grievance within 72 hours after receiving the grievance.

Managed care plans are required to file a report with OCI listing the number of grievances they had in

the previous year. A summary of this information for HMOs is included in the Consumer’s Guide to

Managed Care Plans in Wisconsin available on OCI’s website:

oci.wi.gov/Pages/Consumers/PI-044.aspx

or call OCI at 1-800-236-8517 and request a copy.

• Independent Review

If you are not satisfied with the outcome of the grievance, you have an additional way to resolve some

disputes involving medical decisions. You or your authorized representative may request an

Independent Review Organization (IRO) review your health plan’s decision.

The

independent review process provides you with an opportunity to have medical professionals who

have no connection to your health plan review your dispute. The IRO assigns your dispute to a clinical

peer reviewer who is an expert in the treatment of your medical condition. The IRO has the authority to

determine whether the treatment should be covered by your health plan.

Your health plan should provide you with information on your right to request an independent review

in its written materials and with its final written decision on your grievance. You can also call the health

plan at its toll-free number and request information on independent review.

For more information on the independent review process, the Fact Sheet on the Independent Review

Process in Wisconsin is available on OCI’s website: oci.wi.gov/Pages/Consumers/PI-203.aspx

or call OCI

at 1-800-236-8517 and request a copy.

• Mandated Benefits

Health insurance policies sold in Wisconsin often include “mandated benefits.” These are benefits an

insurer must include in certain types of health insurance policies. Except for HMOs organized as

cooperatives under ch. 185, Wis. Stat., HMOs are required to provide the same benefits as traditional

insurers.

Information about Wisconsin mandated benefits is available in the Fact Sheet on Mandated Benefits in

Health Insurance Policies available on OCI's website: oci.wi.gov/Pages/Consumers/PI-019.aspx

or call 1-

800-236-8517 to request a copy.

Other Insurance Programs

• BadgerCare Plus

BadgerCare Plus is a health care coverage program for low-income Wisconsin residents who meet

PI-085 (R 11/2023) 34

eligibility requirements. Because BadgerCare Plus does not have an open enrollment period, you may

apply for the program at any time.

If you would like more information about BadgerCare Plus, you can go to dhs.wi.gov/forwardhealth

call member services at 1-800-362-3002.

Other Types of Policies

There are several other types of policies on the market. These are not substitutes for basic or major medical

coverage.

• Vision & Dental Policies

These are policies that provide benefits only for vision or dental care. They should not be bought as

substitutes for more comprehensive coverage.

• Hospital Confinement Indemnity

This type of policy pays a fixed amount for each day in the hospital for a specified number of days.

Sometimes benefits are not paid until you have been hospitalized for several days. These policies are

often not a good buy unless the daily benefit is quite high.

• Specified Disease Policies

These policies cover a specific disease or group of diseases. The most common type is cancer

insurance. If you already have comprehensive coverage, this coverage is not necessary.

Any insurer selling cancer insurance must give A Shopper's Guide to Cancer Insurance to applicants.

The publication is also available on OCI's website: oci.wi.gov/Pages/Consumers/PI-001.aspx

or call OCI

at 1-800-236-8517 to request a copy.

• Health Discount Cards

Be wary of health discount cards which offer a reduced fee for doctor visits or other medical services.

Health discount cards are NOT health insurance plans and are therefore not regulated by OCI. Some

discount cards have been the subject of numerous scams in recent years, so be sure to check these out

carefully.

Disability Income Insurance

Anyone who works should consider purchasing disability income insurance, which is designed to help replace

income lost because of a long-term injury or illness. People of working age are more likely to become disabled

than they are to die—making disability insurance at least as important as life insurance.

There are two types of disability insurance policies available: short-term coverage or long-term coverage. Short-

term policies will typically replace a portion of your salary from three to six months following your disability.

Long-term policies will generally begin six months after your disability and can provide coverage for a few years

or even until retirement.

Compare different products before choosing the product that best suits your needs. Start by determining how

much income you need to meet critical financial obligations. These include rent/mortgage, food,

fuel/transportation, utilities, and loan obligations. A disability may also bring with it increased or additional

expenses like health care costs, assistance with daily activities, and even home modifications.

PI-085 (R 11/2023) 35

Disability income policies have waiting periods before benefits become payable. The waiting period starts after

you have become disabled for a covered disability. The longer the waiting period, the lower the premium will be.

The period of time for which benefits are payable can also vary based on whether the disability was caused by an

accident or illness. A long-term disability income policy may provide for lifetime accident benefits and illness

benefits to the age of 65. The longer the benefit period, the higher the premium will be.

What it Covers

The amount of monthly benefit provided by a disability income policy may be stated as a percentage of income

or as a set dollar amount. The amount of benefit for which you can qualify is usually based on a percentage of

your gross earnings, normally around 60%. Some policies provide a partial disability benefit that may be optional.

Some policies may reduce your disability income benefit by the amount you receive from social security or

worker's compensation.

Occupational therapy and vocational rehabilitation benefits may also be provided by a disability income policy.

Things to Be Aware of Regarding Disability Insurance

A disability income policy generally requires that you be totally disabled before benefits are paid. The definition

of total disability varies from policy to policy. There are two different definitions used in disability policies. One

definition is that you are unable to perform your own occupation. The other definition is much more

comprehensive requiring that you are unable to perform any occupation (for which you are suited by education

or experience). This distinction can be important for jobs that require very specialized physical skills such as

surgeons or loggers.

Some points to check:

• What is the definition of disability? Does it cover both injury and sickness? Is it for partial or total

disability? Is it defined as inability to perform your current occupation or as inability to perform any

occupation of which you are capable?

• When does coverage begin? Is it different for injury and sickness?

• How long will benefits be paid? What is the weekly or monthly benefit?

• How much of your income will be replaced?

• What does it cost?

• Is it

guaranteed renewable?

• Disability income policies may not pay if the disability results from certain causes. Check the policy for

any exclusions or limitations that might apply. If you have any questions, ask your agent or company.

Medical Underwriting

Before you can buy a disability income insurance policy, you must give the insurance company information about

your health. This process is called medical underwriting. The company uses medical underwriting information to

predict what the likelihood is that you will file claims against the policy. Each company has its own underwriting

standards, which means one company could reject your application but another may be willing to accept it.

The insurance company will get most of its underwriting information from these sources:

• Your application form

• Your past medical history

• The Medical Information Bureau

PI-085 (R 11/2023) 36

Underwriting Decisions

Insurance companies may accept your application and issue the policy as requested, or they may do one of the

following:

• Issue the policy with full protection but charge a higher premium. This might occur if you have a

chronic disease such as diabetes.

• Modify the benefits, such as increasing the deductible.

• Exclude a specific medical problem from coverage by adding an exclusion

rider.

• Decide not to issue a policy—turn down your application for insurance.

If you are turned down or denied coverage:

• Find out why you were denied coverage. The company is required to provide you with that information

in writing. If it is due to your medical history, make sure the information the company received was

correct.

• Try several other insurance companies as some may view your situation differently.

The Medical Information Bureau

When you sign the application form, you authorize the insurance company to obtain information about you from

the Medical Information Bureau (MIB). The MIB is a private company used by insurance companies to share

information about insurance applicants. If you are denied coverage based on medical history, you may want to

find out if you have a MIB file, and if so, if it is correct. If your file contains incorrect information, you have the

right to ask the MIB to correct it. You may obtain a copy of your report by contacting:

Medical Information Bureau (MIB)

50 Braintree Hill Park #400

Braintree, MA 02184

(866) 692-6901

(866) 346-3642 TTY (for hearing impaired)

mib.com

Buying Insurance

For the most part, insurance is sold directly through an insurance company or indirectly through an agent or

broker. An independent agent may represent more than one and sometimes several insurance companies. An

exclusive or captive agent sells solely for one insurer or group of related insurers. Independent agents, as well as

exclusive agents, may place business with another insurer if the insurer(s) he or she represents does not write the

type of insurance needed. A broker represents you in your dealings with an insurance company.

In buying insurance, price is certainly a big consideration. However, understand that your insurance agent also

performs an important role. An agent makes sure the insurance is up-to-date, reflecting the actual values of the

business, such as additional or replacement equipment, new structure, or expanded operations. 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.

PI-085 (R 11/2023) 37

An agent can offer advice on the amount and types of business insurance you need. You may need to work with

several agents to make sure you are getting the needed coverage at the best available price.

To assure you are dealing with a reliable agent, you may wish to talk with other business owners in your

community to learn what agents they use and how satisfied they are with these agents. You should also discuss

your needs with an agent who has experience with your particular type of business. If you are a landscape

gardener, for example, the risks you face will be very different from those of an ice cream parlor and you may

need an agent who specializes in your field to assist you.

When buying business insurance, you should:

• Shop around, including contacting several agents and/or insurance companies.

• Understand what you are buying.

All companies and agents doing business in Wisconsin are licensed by OCI. Licensing information about agents

and companies can be found on OCI’s website at oci.wi.gov

Before Disaster Strikes

• Wisconsin has several laws to protect you before and after you purchase insurance.

• Insurance companies and agents may not misrepresent the terms of an insurance policy.

• Insurance companies may not unreasonably delay their claims investigations, fail to pay a legitimate claim

within a reasonable time after proof of loss, or engage in other unfair claims settlement practices.

• Insurance companies may not cancel a policy mid-term unless specific, limited reasons justify the

cancellation.

• Insurance companies must provide a 60-day notice of nonrenewal. They also must give 60 days notice of

renewal on altered terms of an expiring policy when the companies increase rates by over 25% unless

something you do causes the increase.

• Although an insurance company may cancel your policy for nonpayment of premium, you may be entitled

to a grace period. A grace period is the period during which coverage continues even if the premium has

not been paid. For individual life insurance policies, it is one month. For health insurance, it is seven days for

weekly premium policies, ten days for monthly premium policies, and one month for all other policies. No

grace period is required for auto or property insurance.

• If you believe an insurance company has violated your rights, you may want to first complain to your agent

or the insurance company. If this does not resolve the problem, you may file a complaint with OCI. A

complaint form is available on OCI's website at oci.wi.gov/complaints

Unfair Discrimination

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• Insurers may not refuse, cancel, or restrict coverage on the basis of the sex of the applicant or insured.

• Insurers may not refuse, cancel, or deny coverage for auto or property insurance solely because of a past

criminal record, physical or developmental disability, past mental disability, age, marital status, sexual

preference, or “moral” character.

• Insurers may not refuse, cancel, or limit the amount of coverage for property or casualty insurance because

of the geographic location of the risk unless required by law or for a legitimate business purpose.

• No insurer may refuse or limit coverage or charge a different rate because of a mental or physical condition

except when the refusal, limitation, or rate differential is based on either sound actuarial principles or actual

or reasonably anticipated experience.

Small Business Resources

Wisconsin Economic Development Corporation (WEDC)

WEDC is the state's primary agency for the delivery of integrated services to businesses. Visit inwisconsin.com

learn more.

Department of Safety and Professional Services (DSPS)

DSPS is responsible for credentialing and regulating various professions in the state of Wisconsin. Regulation of

professions is accomplished through appropriate licensing boards as well as directly by DSPS. DSPS provides

centralized administrative services to 26 regulatory boards, with responsibilities for regulating over 100

professions, occupations, and business establishments. Visit dsps.wi.gov

to learn more.

Department of Financial Institutions (DFI)

The Department of Financial Institution's mission is to protect consumers of financial services and ensure the

soundness of Wisconsin's financial institutions. Visit wdfi.org

to learn more.

Department of Revenue (DOR)

Business Development and Government Relations: revenue.wi.gov/Pages/Businesses/bdgr.aspx

Starting a Business: revenue.wi.gov/Pages/Businesses/New-Business-home.aspx

Business Resources: revenue.wi.gov/Pages/Businesses/home.aspx

Small Business Administration (SBA)

The SBA makes direct business loans and guarantees bank loans to small businesses, as well as making loans to

victims of natural disasters, working to get government procurement contracts for small businesses and helping

business owners with management and technical assistance and business training. Visit

sba.gov/offices/district/wi/milwaukee

to learn more.

Department of Agriculture, Trade and Consumer Protection (DATCP)

ID Theft Tips: datcp.wi.gov/Pages/Programs_Services/IdentityTheftTipsBusiness.aspx

Privacy Laws: datcp.wi.gov/Pages/Programs_Services/PrivacyLaws.aspx

Data Breaches: datcp.wi.gov/Pages/Programs_Services/DataBreaches.aspx

Cybersecurity & Infrastructure Security Agency (CISA) - Cybersecurity Insurance

Cybersecurity insurance is designed to mitigate losses from a variety of cyber incidents, including data breaches,

business interruption, and network damage. Visit https://www.cisa.gov

to learn more.

PI-085 (R 11/2023) 39

Glossary

Actual cash value: The value of the property when it is damaged or destroyed. This is usually figured by taking

the replacement cost and subtracting depreciation.

Adjuster: An insurance company representative who seeks to determine the extent of the firm’s liability for loss

when a claim is submitted.

Agent: A person licensed by a state insurance department who solicits, negotiates, or effects insurance contracts

on behalf of one or more insurers.

All risks: The term “all risk” means there is coverage for all perils except those excluded. A particular exposure

would be insured against economic loss by any peril not specifically excluded under the terms of the contract.

Auto insurance: A type of insurance that protects the policyholder against losses involving automobiles. Different

coverages can be purchased depending on the needs and wants of the insured.

Binder: An agreement to provide immediate insurance coverage. May be oral or written and sets forth conditions

of coverage. Often used during the interval between the coverage becoming effective and the time a formal

policy is prepared and delivered. Normally it is issued for a limited period of time.

Broker: A marketing specialist who represents buyers of property and liability insurance and who deals with

either agents or companies in arranging for the coverage required by the customer.

Captive agent: An agent who sells insurance for only one company, as opposed to an independent agent who

represents several companies.

Claim: A request for reimbursement for a loss covered by the policy. For example, a claim for items stolen from

the policyholder’s business.

COBRA benefits: COBRA stands for “Consolidated Omnibus Budget Reconciliation Act of 1985,” which requires

companies with 20 or more employees to offer separating employees the option to continue their group health

care coverage at their own expense.

Coinsurance: A provision that requires the insured to share in the cost of covered services on a percentage basis.

A typical coinsurance arrangement is 80% by the insurer and 20% by the insured.

Collision: An optional auto insurance coverage that pays for damage to the policyholder’s car caused by its

collision with another vehicle or object.

Comprehensive coverage or Other than Collision: Personal auto insurance policies use this term for physical

damage coverage for losses by fire, theft, vandalism, falling objects and various other perils.

Conditions: Provisions of an insurance policy that state the rights and duties of the insured or the insurer. Typical

conditions have to do with such things as the insured’s duties in the event of loss, cancellation provisions, and the

right of the insurer to inspect the property.

Copayment: A provision in insurance policies that requires the insured to pay a flat fee for certain medical

expenses.

Coverage: The scope of protection provided under an insurance contract.

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Deductible: The amount of an insured loss paid by the policyholder. For example, if you select a deductible of

$250 for your auto insurance policy, you agree to pay the first $250 worth of damages to your car if you are in an

accident.

Defined network plan: Any health benefit plan that requires or creates incentives for an enrollee to use providers

that are owned, managed, or under contract with the insurer offering the plan. This type of plan is sometimes

referred to as a managed care plan.

Depreciation: A decrease in the value of property over a period of time resulting from use, obsolescence, or wear

and tear.

Disability insurance: A type of health insurance that pays a monthly income to the policyholder when he or she

is unable to work because of an illness or accident.

Endorsement: An attachment to an insurance policy that amends and alters the coverage provided in the policy.

In life and health insurance it is called a rider.

Exclusions: Specific situations, conditions, or circumstances that are listed in the insurance policy as not being

covered.

Health insurance: A general term for insurance against loss by sickness or bodily injury. This usually includes

coverage for medical expenses such as doctor visits and hospital stays and can cover normal and preventive care

such as checkups, prenatal care, and well-baby care.

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

Insurance: A formal device for reducing the chance of loss by transferring the risks of several individual entities to

insurance companies.

Insured: The party covered by an insurance arrangement, to whom an insurance company agrees to indemnify

for losses, provide benefits, or render services.

Liability: Individual responsibility for causing, through negligence, injury to another person or damage to another

person’s property.

Managed care: (see Defined network plan)

Market value: This is a value placed on real or personal property which relates to its resale value in the market

place. Since the object of most property insurance policies is to pay the insured the actual cash value or the cost

to repair or replace the damaged or destroyed property, the “market” or “book” values are not used in loss

settlements.

Medical payments insurance: A form of coverage, optional in various liability policies such as auto insurance,

which provides for the payment of medical and similar expenses regardless of liability.

Named peril or specified peril: This is a peril indicated or identified in the contract as a cause of loss for which

insurance is being provided. Under such contracts if a peril is not named or specified it is not covered.

Package policy: A single insurance policy that combines several coverages available separately. For example,

business owner’s insurance is a package policy, combining property, liability, and theft coverages.

Peril: A property insurance term referring to the possible cause of loss such as a fire or windstorm.

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Personal property: All tangible property not classified as real property.

Policy: A written contract for insurance between the insurance company and the policyholder.

Premium: The amount of money an insurance company charges, based on a given rate, to provide the coverage

described in the policy, or simply stated, the price of insurance protection for a specified risk for a specified

period of time, typically one year.

Property/Casualty insurance: Property insurance covers damage to or loss of the policyholder’s property. The

terms “casualty” and “liability” insurance are often used interchangeably. Both cover the policyholder’s legal

liability for damages caused to other persons and/or their property.

Rate: The cost of a unit of insurance as determined by insurance companies and state regulators. The rate serves

as the basis for the premium.

Real property: Land and most things attached to the land such as buildings and vegetation.

Replacement cost: The cost of replacing property without a deduction for depreciation.

Risk: This word has two meanings for insurers: (1) the chance of loss such as from a peril; and (2) the person or

entity that is insured by a policy.

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

Umbrella liability: A form of insurance protection against losses in excess of the amount covered by other

liability insurance policies; also protects the insured in many situations not covered by the usual liability policies.

Underwriting: The process by which an insurance company selects and classifies risks according to their degree

of insurability.

Underinsured motorist (UIM) coverage: Coverage in an automobile insurance policy under which the insurance

company will pay damages to the insured for which another motorist is liable if the motorist causing an accident

has lower bodily injury liability limits than your UIM limits. The maximum dollars paid is then the difference

between the two limits.

Uninsured motorists (UM) coverage: Coverage in an automobile insurance policy under which the insurance

company will pay damages to the insured for which another motorist is liable if that motorist is unable to pay

because he or she is uninsured. This coverage applies to bodily injury damages only. Injuries to the insured

caused by a hit-and-run driver are also covered.

Utilization review: A method of claims review whereby the insurance company analyzes a case, either

prospectively, concurrently, or retrospectively to determine if the treatment given is necessary and appropriate.

Worker’s compensation insurance: A policy conforming to state law which pays benefits to an employee (or an

employee’s family) if the employee suffers a job-related injury (including death) or occupational injury.