Conditions to bind:
The Bureau can only bind coverage after:
Once these conditions are met, the Indiana WCIP rules permit us to bind coverage the day after the U.S. Postal Service (USPS) postmark. To meet today's business practice of using overnight delivery service, we also will bind coverage the day after the courier pick-up date. However, we must have proof of the pick-up date from the courier. Most overnight envelopes do not provide sufficient proof so you need to get a log statement from the courier. Our experience seems to show fewer problems if you use the U.S. Postal Service postmark.
If no postmark or proof of pick-up
If an envelope has no postmark (remember, metered mail does not have a postmark!), or the postmark is unreadable, or if there is no proof of an overnight delivery pick-up date, then we will bind coverage the day after the bank processes the deposit check. Under this scenario, the binder date is dependent upon the days that could pass while the courier is delivering the envelope and the days that could pass for the bank to open its mail, enter application header information, and deposit the check. This could easily reach 5-10 days.
If deposit check bounces
If the check does not clear the bank due to insufficient funds (NSF), then coverage is not bound because an NSF check is equivalent to no payment at all. However there is an opportunity to keep the original binding date.
Here's the ICRB's procedure:
If the ICRB has an application in process (not yet bound), and we learn that the initial check is NSF, then we send an AR2 letter stating that since the check is NSF the only way to keep the original binding date is to OVERNIGHT a replacement check to the bank with a copy of our letter. The check must be CERTIFIED or CASHIERS. We normally allow 5 days for the check to show up.
Here are the rules that support our procedure:
Refer to The Basic Manual Indiana Assigned Risk Special Rules (green pages), WCIP Article II, 2.09, last sentence which says:
"Coverage will not be bound by the Plan Administrator without a complete signed application and receipt of the appropriate deposit or initial premium."
However, there is room for flexibility on a case-by-case basis. The ICRB may accept replacement funds in the form of a certified or cashier's check within a specified timeframe to keep the original binding date. Refer to The Basic Manual Indiana Assigned Risk Special Rules (green pages), WCIP Article II, 2.09, iii, which says:
"the total initial or deposit premium has been received by the Plan Administrator within an established time frame."
The flexibility is based on the Basic Manual Assigned Risk Supplement Rule II.A.6. that provides:
"If a deposit premium payment is rejected for insufficient funds, replacement funds must be provided in the form of a certified or cashier's check."
Although Plan rules do not specifically cover the scenario in which the bounced check is not discovered until after the ICRB issues the binder, the servicing carrier, at its option, could:
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request a certified or cashier's check and maintain the effective date;
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request a certified or cashier's check with new effective date as of receipt of new check;
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rescind the binder and thus, no coverage.
The servicing carrier would not need permission to cancel the binder from the ICRB, whatever option it took. The thought is that since technically, no deposit was received due to insufficient funds, and a deposit is necessary to bind coverage, there would be nothing to cancel, so no permission would be necessary.
In summary, a dishonered check is not a premium payment.
Who is the servicing carrier?
We use several insurance companies to actually write the assigned risk policies. They are called the servicing carriers. We will know which carrier is assigned to an employer once the binder is issued, not before. So, if there is missing information on the application or the deposit amount is wrong, we cannot bind coverage and we will not know which servicing carrier will be picked by our assignment system.
For mailed applications, it can take a 7-10 days before we receive the app from the bank to process. So, if you are anxiously waiting to issue a certificate of insurance, it could take that long after you mail the app before we know who the carrier will be.
Quick Summary
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Do we have... |
YES |
NO |
Postmark or
Proof of Pick-up?
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Bind day after postmark or proof
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Bind day after
bank deposits check
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reference: The Basic Manual Indiana Assigned Risk Special Rules (green pages), Article II, 2.05.