General Liability and Workers' Compensation in Oklahoma

Commercial General Liability (CGL) Insurance

Purpose

Commercial General Liability (CGL) insurance protects businesses against claims for:

• Bodily injury to third parties
• Property damage to others
• Personal and advertising injury
• Medical payments to others

CGL Coverage Structure

Coverage A: Bodily Injury and Property Damage

Covers liability for:

• Slip and fall injuries
• Product-caused injuries
• Completed operations injuries
• Property damage caused by business operations

Coverage B: Personal and Advertising Injury

Covers claims for:

• False arrest or detention
• Malicious prosecution
• Libel, slander, defamation
• Copyright or trademark infringement in advertising
• Invasion of privacy

Coverage C: Medical Payments

Covers:

• Immediate medical expenses for injured parties
• No fault determination needed
• Typically $5,000-$10,000 per person
• Goodwill coverage to prevent lawsuits

Occurrence vs. Claims-Made Policies

Example of Occurrence:

Policy period: 2024 Incident: Customer slips and falls in December 2024 Claim filed: March 2026 Result: 2024 occurrence policy covers claim even though filed 2 years later

Example of Claims-Made:

Policy period: 2024 Retroactive date: January 1, 2024 Incident: Customer slips in December 2024 Claim filed: March 2026 (policy not renewed) Result: No coverage unless Extended Reporting Period (tail) purchased

Exam Tip: Occurrence policies cover incidents that OCCUR during the policy period regardless of when the claim is made. Claims-made policies cover claims MADE during the policy period for covered incidents.

Oklahoma Workers' Compensation

Overview

Oklahoma requires most employers to carry workers' compensation insurance for employees injured on the job.

Who Must Have Coverage

Required For:

• Employers with 1 or more employees (with limited exceptions)
• Construction employers with any employees
• Most industries and business types

Exemptions:

• Sole proprietors with no employees
• Business partners (unless they elect coverage)
• Independent contractors (if properly classified)
• Certain agricultural workers
• Domestic workers in private homes

Benefits Provided

Workers' compensation provides four types of benefits:

Exclusive Remedy Doctrine

Key Principle: Workers' compensation is the EXCLUSIVE REMEDY for workplace injuries

What This Means:

• Injured workers receive benefits without proving fault
• Employees CANNOT sue employer for workplace injuries
• Eliminates tort liability for employers
• Trade-off: Guaranteed benefits vs. limited amounts

Exceptions to Exclusive Remedy:

• Employer intentionally caused injury
• Employer lacks required workers' comp insurance
• Third-party liability (manufacturer, contractor, etc.)

Premium Determination

Workers' compensation premiums are based on:

Payroll Classification:

• Each job classification has a rate per $100 of payroll
• Rates reflect injury risk of that occupation
• Manual rates set by National Council on Compensation Insurance (NCCI)

Formula:

$\text{Premium} = \frac{\text{Payroll}}{100} \times \text{Rate} \times \text{Experience Mod}$

Example:

Payroll: $500,000 Classification rate: $3.50 per $100 Experience mod: 1.15 (higher than average claims)

\text{Premium} = \frac{$500,000}{100} \times 3.50 \times 1.15 = $20,125

Experience Modification Factor

Experience Mod adjusts premium based on employer's loss history:

• 1.00 = Average claims experience
• Below 1.00 = Better than average (discount)
• Above 1.00 = Worse than average (surcharge)

Example:

• Experience mod 0.85 = 15% discount
• Experience mod 1.25 = 25% surcharge

Factors Affecting Experience Mod:

• Claim frequency (number of claims)
• Claim severity (size of losses)
• Payroll size (larger employers more stable)
• Three years of loss experience used

Oklahoma Workers' Compensation Administration

Oklahoma Workers' Compensation Commission

Responsibilities:

• Oversees workers' comp system
• Resolves disputes between parties
• Ensures compliance with requirements
• Sets medical fee schedules

Contact:

• Oklahoma Workers' Compensation Commission
• 1915 N. Stiles Avenue, Oklahoma City, OK 73105
• (405) 522-8600

Reporting Requirements

Employer Obligations:

1. Post Notice: Display workers' comp coverage notice
2. Report Injuries: File Form 3 (First Report of Injury) within 10 days
3. Maintain Records: Keep injury records for 5 years
4. Cooperate: Provide information to insurer and injured worker

Penalties for Non-Compliance:

• Fines: $100-$10,000 per violation
• Stop-work order for uninsured employers
• Personal liability for benefits
• Criminal penalties for willful violations

Return-to-Work Programs

Oklahoma encourages return-to-work programs:

Benefits:

• Reduces duration of disability benefits
• Maintains employee connection to workplace
• Lowers experience mod
• Improves employee morale

Types of Modified Duty:

• Light duty assignments
• Reduced hours
• Different job functions
• Transitional work programs

Professional Liability Insurance

Purpose

Professional Liability Insurance (Errors & Omissions) covers negligence in providing professional services.

Who Needs Professional Liability

Common Professions:

• Physicians and healthcare providers (Medical Malpractice)
• Attorneys (Legal Malpractice)
• Accountants and CPAs
• Architects and engineers
• Insurance agents and brokers
• Real estate agents
• Consultants and advisors

Coverage Provided

Protects Against:

• Professional negligence or errors
• Omissions or failure to act
• Breach of professional duty
• Misrepresentation or mistakes
• Defense costs and legal fees

Example Claims:

• Doctor misdiagnoses medical condition
• Accountant makes tax preparation error
• Architect's design causes structural failure
• Insurance agent fails to secure proper coverage

Claims-Made Basis

Professional liability policies are typically claims-made:

Important Considerations:

• Retroactive date establishes coverage start
• Extended Reporting Period (tail) needed when policy ends
• Prior acts coverage needed when switching insurers
• Continuous coverage essential

Tail Coverage Costs:

• Typically 150-300% of annual premium
• Provides extended reporting (1-5 years or unlimited)
• Essential when retiring or changing carriers

Exam Tip: Professional liability is almost always claims-made coverage. When changing insurers or retiring, tail coverage is essential to cover future claims for past services.

Oklahoma Business Owner's Policy (BOP)

Package Policy Benefits

A Business Owner's Policy (BOP) combines property and liability coverage:

Typical BOP Includes:

• Building and business personal property coverage
• Business income and extra expense
• General liability coverage
• Medical payments
• Equipment breakdown (optional)

Advantages:

• Lower cost than separate policies
• Simplified coverage
• Convenient single policy
• Standard coverage for small businesses

Eligible Businesses

BOPs are designed for small to medium businesses:

Typical Eligibility:

• Office buildings under 100,000 sq ft
• Retail stores under 15,000 sq ft
• Restaurants under 7,500 sq ft
• Apartment buildings with 6 or fewer units
• Low to moderate hazard operations

Ineligible Businesses:

• Banks and financial institutions
• Auto dealers and repair shops
• Bars and nightclubs
• Contractors and builders
• Large manufacturing operations