How do dividends apply to workers

Workers’ compensation dividends are designed to pay the insured business a return premium, given the loss ratio meets a required percentage. The loss ratio is defined as the comparison of premiums paid to losses incurred.

Only some insurance companies that provide workers’ compensation offer dividend plans. The two most common dividend plans are a flat-dividend plan and a sliding-dividend plan. There is also a less common combined dividend plan, also known as a loss-ratio plan.

The following further explains each type of dividend plan:

Flat-Dividend Plan: Returns a flat percentage of the premium to those policy holders that are eligible; typically 5 or 10 percent.

Sliding-Scale Dividend Plan: The size of the dividend will depend on the insured’s loss ratio.

Combined Dividend Plan: Combines both a flat dividend plan and a sliding –scale dividend plan


Keep in mind, dividends are not guaranteed, and will not be paid out until the completion of the policy audit. In addition, there must be no outstanding premium and the premium must have been paid on time, in order to be considered to receive the dividend.

What is “PIP” and MedPay?

If you live in a “no-fault” state, such as Florida, you are required to purchase Personal Injury Protection (PIP) and have the option to purchase Medical Payments (MedPay). PIP and MedPay cover the medical bills of you and the passengers in your car, in the event of an accident.

PIP will provide coverage regardless of whether you are in your own personal vehicle or someone else’s. PIP is unique in that is “follows” the driver rather than the vehicle. PIP pays $10,000 total, and is the first form of payment, followed by MedPay. The only exception to when PIP may not be paid first, is when worker’s compensation may be involved.

PIP covers up to 80% of your medical bills and 60% of lost wages. Lost wages are defined as potential earnings the insured was unable to receive as a result of injury or disability.

The remaining 20% of your medical bills are covered by MedPay, health insurance or Medicare, and possibly the at fault driver’s bodily injury insurance coverage.