How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Joseph Your Own Question
Joseph, Lawyer
Category: California Employment Law
Satisfied Customers: 5299
Experience:  Extensive experience representing employees and management
Type Your California Employment Law Question Here...
Joseph is online now
A new question is answered every 9 seconds

We got workers comp. insurance with a new company this year

Resolved Question:

We got workers comp. insurance with a new company this year (as of Jan. 1st.). We were asked by the new company for the last 5 years loss runs, which we provided. We had an accident occur in October, 2011 which resulted in a loss to the old company. The old company did not have any loss amounts yet as of the end of the year and we had no information as to what the losses would be. The new company sent a loss control person to our business (after the policy was issued) to see if he had any recommendations as to the safety of our business and we told him about the accident from October. Other than that he had no recommendations and thought that our business was run safely and professionally. He informed the new company of the accident from October and now they are hinting that we misrepresented our business by not disclosing the accident. I read in the policy that they can cancel us for 'material misrepresentation'. They did not ask if we had had a recent accident. Can they cancel us?
Submitted: 5 years ago.
Category: California Employment Law
Expert:  Joseph replied 5 years ago.

Unfortunately, failing to disclose that you had a new accident could constitute a 'material misrepresentation,' which would arguably allow your new workers' compensation company to cancel your workers' compensation insurance.

You could contest the cancellation, however, since you did disclose the accident to the loss control person who was sent to the business, and you didn't intentionally fail to disclose that the accident occurred.

If the workers' compensation company does cancel your coverage, then, you could sue them for breach of contract since you didn't intentionally fail to disclose the accident that occurred in October.
Joseph and other California Employment Law Specialists are ready to help you
Customer: replied 5 years ago.

I replied to Joseph for more information but I think I used the wrong window and they want more money. Did you get the follow up question I asked a few minutes ago?

Expert:  Joseph replied 5 years ago.
No, I didn't get your response. You can post it here and I'll answer it.
Customer: replied 5 years ago.
What I said was that I am a little fuzzy on why they would cancel us for 'material misrepresentation' if we could, in turn, sue them for breech of contract...and win? We gave them all of the information they asked for. We were not asked if there had been any accidents until they sent the safety guy here after issuing the policy at which time we gave them the information. After that they asked for an new loss report but there was still no information regarding the accident on it yet. We knew that it would eventually show up on loss reports or possible change in our experience modification and they would be able to change next years quote but we never lied to them or intended to mislead them. We didn't think it would matter to them anyway since it was no financial loss to them. We thought that they just needed to see if there was a pattern of accidents for our company which our loss reports showed was not the case. Also, once a comp. company gives you a quote, can they increase that during the policy year?
Expert:  Joseph replied 5 years ago.
I meant that it could arguably be considered a material misrepresentation, even though you didn't intentionally fail to disclose the information to the workers' compensation carrier.

That means that they would have some basis to cancel the coverage, but since you provided all the information that was requested and didn't misrepresent anything to them, you would have a cause of action for breach of contract if the carrier canceled your coverage for that reason.

Once the workers' compensation company gives you a quote, the company could still increase it during the policy year, unless you have a contract with the carrier in place that states what the premium will be for the year.