Uninsured Employers May Not Actually Realize They Lack Coverage

Employers have legal responsibilities when it comes to their employees. The law requires employers in California to carry workers’ compensation insurance in order to protect their workers in the case of a workplace injury. Uninsured employers may face serious legal consequences for failing to comply with this requirement. Therefore, it is essential for an employer to periodically make sure the employer’s insurance coverage is intact.

One construction company recently found out that its workers’ compensation insurance coverage was not intact despite paying premiums to the company’s insurance broker. Apparently, the 51-year-old insurance broker never used the money to pay for the coverage but, instead, stole the insurance premium payments and kept the money for herself. The woman was the operator of her own insurance brokerage known as Lotte Insurance Services.

The insurance broker ended up being charged with a felony insurance fraud charge as well as grand theft. She was subsequently convicted and was then ordered to return more than $19,000 worth of stolen premiums along with interest. The employer had only found out about the fraud after being contacted by a collection agency regarding the non-payment of insurance premiums due. It turns out the construction company had been uninsured for months.

Luckily, there were no workplace accidents that occurred during the time when the construction company in California was without workers’ compensation insurance. When uninsured employers experience workplace accidents that result in injuries, it can increase their legal and financial problems exponentially. In these instances, a persuasive employer defense may be necessary.

Source: insurancejournal.com, “Former Southern California Insurance Broker Found Guilty of Stealing Premiums“, December 23, 2015