Why do companies want to know if we have a surety bond?
This is a frequently asked question by our readers and clients. The answer to the question differs depending on your place of employment, but it’s critical to understand why you’ve been asked it because it could be crucial in a personal injury case.
When an employer in Ohio terminates your job for whatever reason, they will ask if you are covered by a surety bond (voluntary or involuntary). That does not mean that if you refuse to sign the waiver form and say no, you will not be fired. Employees who refuse to renounce their rights under Ohio Revised Code 4113.61 can still be fired. The waiver essentially states that if an injured worker files a claim against them (the employer) and you obtain a judgment, the employer will not hold it against you because you refused to sign the waiver.
Employers may also inquire about this issue if they want their worker’s compensation coverage to be upheld in court. If an injured worker refuses to sign a waiver form that is part of their employer’s employment contract, it could be used against them in a variety of ways.
However, if an employee refuses to sign the release but does not suffer any type of injury or loss of employment as a result of doing so, the employee is not guilty of any wrongdoing. Employers have the right to fire employees at any time as long as they are not discriminating on the basis of age, ethnicity, gender, or other characteristics.
What makes a surety bond different from other types of insurance?
Surety bonds are not insurance, but they function in a similar fashion. The employer (principal), the injured worker (obligee), and the surety firm are the three parties who make up a surety bond (surety). Unless they have obtained state-mandated coverage, the principle undertakes to follow Ohio’s worker’s compensation regulations or risk having to pay any claims in full. If either of these parties fails to fulfill their obligations under their contract, the surety business will be responsible for covering the damages that the principal fails to cover.
Employers must obtain state-mandated coverage by purchasing a $10,000 or $50,000 workers’ compensation policy (the premium is determined by the employer’s payroll). If an Ohio employee makes a claim against their employer and it is established that they were injured at work, the claim is handled, which includes medical expenditures as well as financial damages such as lost earnings.
The employee presents their claim to the insurer directly, who then refers them to their own doctors for examination. Because insurance firms sometimes utilize 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, this process sometimes leads to conflicts. If the insurer denies workers’ compensation payments, Ohio law allows an injured worker to appeal the judgment for up to one year (365 days) and occasionally longer.
What is a surety bond’s purpose?
A surety bond ensures that the employer has enough money on hand in the event that an injured worker makes a valid claim. Because it covers the potential cost of physical injury claims, not just medical expenditures and lost income, a $50,000 policy will hold up better than one with only $10,000 in coverage.
This means that if a company only obtained the bare minimum of workers’ compensation coverage required by Ohio law, they may find themselves in hot water with their insurer if they run out of money before all claimants are compensated.
A surety company will step in if an insurance company fails to pay out its share while providing state-mandated workers comp coverage. When an employer buys a policy, the insurer commits to pay the whole amount of all claims, less any money owing to them by the employer.
Employers are liable for any unpaid medical bills, lost earnings, and other expenditures incurred as a result of an accident on their premises. If an employer fails to set aside sufficient funds to pay these expenses, the surety firm is responsible for the remaining balance.
Why is a surety bond required?
Before hiring new employees, Ohio employers must provide documentation to their insurance company that they have obtained state-mandated workers’ compensation coverage. The employer has up to 30 days following the expiration of their policy to present proof to their insurer demonstrating that they have sufficient funds put aside to cover claims.
This is one of the reasons why it’s critical for an injured worker to file a claim as soon as possible because even if the procedure is delayed, they may still be able to file within one year of the workplace accident – sometimes even longer depending on how long it’s been since they were hurt.
Applicants for a surety bond employment must complete all required documentation, including filling out applications, undergoing a credit and criminal background check, and being drug tested.
Once an employer has been approved for state-mandated workers’ compensation coverage, they can hire new employees and have them complete the proper paperwork. This includes supplying contractor license numbers as well as any relevant professional licenses required for this area of employment. Applicants who fail to supply this information will be denied coverage automatically.
What exactly is a surety bond, and how does it function?
A surety bond, also known as a compensating bond, is essentially an insurance policy for the employer to ensure that there is always enough money set aside to pay out claims. Employees can submit claims with the surety firm if their insurance fails to pay out medical expenses, missed earnings, and other charges related to Ohio workers comp. Once the employer runs out of funds, the surety company will step in. These bonds are typically three-year contracts that can be renewed without the need to reapply for coverage provided all parties agree.
After the contractor has received approval for state-mandated workers’ compensation, they can begin hiring additional employees. Accepted applicants undergo a background check, which includes a review of their credit history as well as a criminal search for any felony convictions or outstanding warrants. They must also submit to a drug test for prohibited substances such as marijuana, cocaine, methamphetamines, and opiates, which must be screened before employment.
All of this must be completed within 30 days after the policy’s approval since if it isn’t, the contractor will have until their next renewal date to get everything in order. If an employee makes a claim while working on your site, you will be denied compensation if you do not follow these criteria.