When a change in rate occurs during an insureds policy term, do the new rates apply?
When a workers compensation insurance policy is written, the rate in effect at the inception of the policy applies for the full term of the policy, generally a twelve-month period. The only time that a different rate may apply is if the anniversary rating date (the date the experience modification is effective) and the policy inception date differ. The rates in effect prior to, and after, the anniversary rating date each apply to the policy. The rates in effect prior to, and after, the anniversary date apply to their respective exposures for the two time periods. If a policy is canceled and rewritten, the rates that applied to the canceled policy apply until the expiration date of the original policy. The purpose of this rule is to discourage insureds from requesting to have their policies canceled to take advantage of a lower rate and to also discourage insurance carriers from canceling policies and charging additional premiums when an increase in rate occurs during a policy period.
