Why will employers ask if we are covered by a surety bond?
This is a popular question that we get from our readers and clients. The answer to the question varies based on where you’re employed, but it’s important to understand why you have been asked this question because it could be important in an injury case.
Employers in Ohio will ask if you are covered by a surety bond when they terminate your employment for any reason (voluntary or involuntary). That doesn’t necessarily mean that when you refuse to sign the waiver form, saying no, you won’t be terminated. Employers can still terminate employees when they refuse to waive their rights under Ohio Rev. Code 4113.61. The waiver simply means that if and when an injured worker ends up filing a claim against them (the employer), and if and when you receive a decision, the employer will not hold it against you for refusing to file the waiver.
Employers may also ask this question because they wish to have workers’ compensation coverage upheld in court. If an injured worker declines to sign the waiver form which is part of their employment contract with their employer, this could be used against them in a number of ways.
However, if someone did refuse to sign the waiver, but did not suffer any kind of injury or loss of work under Ohio law, then there is no wrongdoing on behalf of the employee. Employers are able to terminate employees at will so long as they are not discriminating based on certain factors such as age, race, gender, etc.
Why is a surety bond not considered insurance?
Surety bonds are not insurance; however, they act in much the same way. A surety bond is merely a guarantee between three parties, which include the employer (principal), the injured worker (obligee), and the surety company (surety). The principal agrees to abide by Ohio’s workers comp laws or risk having to pay claims in full unless they have purchased state-mandated coverage. If any of these parties fail to uphold their duties under their agreement, then it will be up to the surety company to cover losses that the principal fails to.
Employers are required to secure state-mandated coverage by buying either a $10,000 or $50,000 workers comp policy (the premium depends on the employer’s payroll). If an Ohio worker files a claim against their employer and it’s determined that they suffered an injury at work, then the claim is processed including medical expenses and financial losses such as lost wages.
The worker submits their claim directly to the insurer which sends them to their own doctors for evaluation. This process often leads to disputes because insurance companies sometimes use delaying tactics until claims expire if they don’t find enough evidence to support them or if there isn’t enough time to process them. If the insurer denies workers comp benefits, then Ohio law states that an injured worker has up to one year (365 days) to appeal the decision and sometimes longer.
What is the purpose of a surety bond?
The purpose of a surety bond is to ensure that the employer always has enough money on hand in case an injured worker files a valid claim. A $50,000 policy will hold up better than one which only has $10,000 worth of coverage because it covers the possible cost of bodily injury claims not just limited to medical expenses and lost wages.
This means that if an employer only purchased the minimum amount of workers comp coverage required by Ohio law, then they could easily find themselves in trouble with their insurer for running out of funds before all claimants are paid.
If an insurance company fails to pay out its share while providing state-mandated workers comp coverage, then this is when a surety company steps in. When employers purchase a policy, the insurer agrees to pay out the total amount of all claims minus any money which is owed to them by the employer.
Employers are responsible for covering any unpaid medicals, lost wages, or other expenses incurred as a result of an accident that happened at their job site. If an employer fails to set aside enough funds to cover these costs, then the surety company becomes liable for making good on the remaining balance.
What is a surety bond job?
One of the first steps that Ohio employers must take before hiring new employees is to submit proof to their insurance company that they have secured state-mandated workers comp coverage. The employer has up to 30 days after their policy ends for them to provide documentation to their insurer proving that they have enough funds set aside for paying out claims.
This is part of why it’s so important for an injured worker to file a claim as soon as possible because even if this process was delayed, then they could still file within one year of the accident happening at work – sometimes longer depending on how much time has passed since they were hurt.
A surety bond job requires applicants who are interested in applying must complete all necessary paperwork including completing applications, having credit and criminal background check done as well as having them drug-tested.
Once an employer has been approved for state-mandated workers comp coverage, then they can hire new employees who all fill out necessary forms. This includes providing contractor’s license numbers as well as any pertinent professional licenses that might be needed for this line of work. Applicants who fail to provide this information will automatically be denied coverage.
What is a surety bond and how does it work?
A surety bond – or a compensating bond as it’s sometimes called – is basically like an insurance policy for the employer to ensure that they always have enough money set aside for paying out claims. This means that if their insurer fails to pay out medical expenses, lost wages, and other expenses associated with Ohio workers comp, then employees can file these claims with the surety company who will step in once the employer runs out of funds. These bonds are usually three-year agreements that can be renewed after that time without having to reapply for coverage if all parties agree.
After the contractor has been approved for state-mandated workers comp, then they’re ready to start hiring new hires. Applicants whose applications are accepted go through a background check which involves looking at their credit history and performing a criminal search for any felony convictions or outstanding warrants. In addition, they must also submit to a drug test for illegal substances including marijuana, cocaine, methamphetamines, and opiates which need to be screened before being hired.
It’s important that all of this is done within 30 days after the policy is approved because if it isn’t then the contractor has until the day of their next renewal date to get things in order. Failure to follow these guidelines will result in a denial of coverage if an employee files a claim while working on their site.