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Industry Insights

Moore: Is a Workers' Compensation Policy a Contract?

  • National

We received this question on the similarities or differences between a workers' compensation policy and a contract a few weeks ago. Every so often, J&L receives a few basic questions on workers' comp that I should write more explanations or back-to-basics articles.

James Moore

James Moore

My older brother, David, who reads all of my articles and newsletters, has brought up more than a few times that the articles seem to get too deep into the weeds for a general audience to read and appreciate. He liked the article on President Nixon’s administration examining workers' compensation at the federal level, and the Elvis meets President Nixon pic.

A few years back (more than a few), I was taught about the parts of a valid contract. Let us look at those parts and compare them to a workers' compensation policy.

Please note that this is not legal advice. The following should be considered as risk management suggestions.

The five parts of a valid contract are:

  • Offer made.
  • Acceptance.
  • Consideration.
  • Competency and capacity.
  • Legality or legal intent.

For comparison, a workers' compensation contract entails:

  • Initial or renewal policy forwarded to insured client.
  • Insured's signature.
  • Initial policy premium.
  • Signature of the business owner or one of the officers who has signature authority.
  • The intent is to cover the insured’s employees for compensable on-the-job injuries.

Thoughts and suggestions

Before one signs off on a workers' compensation policy, one should always read the policy completely, including the often unread endorsements at the end. Check out an old but often-read article on DICEE — the five parts of any policy — including workers’ compensation.

DICEE is the easiest way to remember the parts of a policy if you are reviewing your policy before or after signature.

DICEE is an acronym for declarations, inclusions/insuring agreements, conditions, exclusions and endorsements.

This blog post is provided by James Moore, AIC, MBA, ChFC, ARM, and is republished with permission from J&L Risk Management Consultants. Visit the full website at

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