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What is backdated liability coverage?

Your workforce is one of the most valuable resources your Los Angeles small business has. While you no doubt want to provide every workplace protection you can for your employees, the cost of worker’s compensation insurance may be prohibitive. However, if your company is legally required to carry such coverage, and one of your employees is injured on the job, you and your company could be facing, among other things, substantial fines. According to the Society for Human Resource Management, if one of your employees happens to file a claim that goes before the California Workers’ Compensation Appeal Board, you could be fined up $2,000 for each employee on your payroll if the claim is non-compensable, or $10,000 per employee if the accident is compensable.

A better alternative may be to attempt to ensure that your injured employee’s claim never gets that far. How is that possible if your company is uninsured? You could potentially purchase backdated liability insurance coverage. This is insurance coverage offered after a loss event has already occurred. When you request such coverage, insurers typically skip the standard actuarial analysis and instead estimate the potential financial loss you may be facing.

The major factor used in determining whether to offer you backdated liability coverage is whether or not your premiums will exceed the cost of your claim. Your chances of being approved may increase if it appears that your employee’s claim will take a long time to settle, as that means that you will pay out more in premiums. As is the case with other forms of insurance, those who offer backdated liability coverage will usually impose a coverage limit. Thus, you still could be required to meet a portion of the claim expenses out of pocket.  

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