Leaving NYSIF – New York State Insurance Fund – Not So Easy

NYSIF - New York State Insurance FundMy Workers Compensation and Disability Policies are with NYSIF – The New York State Insurance Fund.  Early on, I was single shareholder corporation with no employees and therefore was able to exclude myself from the Workers Compensation Policy.  In the Insurance Industry, this is known as a “Ghost Policy.”  New York State absolutely requires that any business that has a payroll, with or without eligible employees, must have both a Workers Compensation and Disability Policy in place.

At the time, on the advice of my commercial insurance broker, he directed me to NYSIF because they would have the least expensive policy premium minimums.  Since I had no employees to cover, things like customer service and claims were non issues.  I just needed the policies in place to comply with the regulations.  For the most part, if you are in this situation, with no eligible employees and exclude yourself as the single (or no more than two) person shareholder company, NYSIF is a good option for New York State Workers Compensation and Disability coverage.

I was investigating switching Carriers just after my policy had renewed, July 1st.

What I learned was that terminating coverage at NYSIF at any other time than approximately 45 days prior to the policy renewal date comes with extreme prejudice.  NYSIF enforces a 30 Day written cancellation notice as purportedly mandated by New York State Law.

Furthermore, NYSIF enforces something called a “Short Rate” penalty for policies canceled prior to the end date.  In the case of my Disability Policy the penalty was 100% of the paid premium because I was at the policy premium minimum.  For my Workers Compensation policy the NYSIF underwriter would not provide the penalty amount.  He simply stated the penalty would be “severe.”

Be advised that if you have a NYSIF – New York State Insurance Fund Workers Compensation and Disability Policy and want to change Insurance Carriers, you must plan to do so approximately 45 days prior to the end date of your policy.  This will allow you time to get quotes from alternate Carriers and provide the proper 30 Day written notice to NYSIF that you intend to cancel your policy and move your coverage.

Should you decide to terminate your policy with NYSIF, you must send the notice in writing on Company Letterhead at least 30 days prior to the renewal date of the policy.  The letter must include the following information:  Policy Name and Current Address; Policy Number; Reason for Cancellation; Effective Date of Cancellation; Policyholder’s signature; Current Telephone Number.

In the case of the Disability Policy you can send a signed scanned copy of this document via email or fax. However, the Workers Compensation cancellation document will only be accepted via U.S. Mail and NYSIF will look to either the date requested on your letter or “30 Days from the Postmark” whichever is later as the effective date of the cancellation regardless of your intended date.  (Contact NYSIF Customer Service directly to obtain the current contact information for where to send the cancellation letter(s).)

Disclaimer:  The information presented above is my personal experience and current as of the date of this article posting as it applied to my specific situation.  I am a licensed Certified Financial Planner and Certified Public Accountant (licensed in the State of New York.)  I am not licensed to sell or represent any insurance product in any State.  Insurance Carrier rules and regulations vary by State and change frequently.  You must check with your own Agent, Broker, or Insurance Carrier directly to verify the information as it may apply to your specific situation.

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