Insurance Matters!

4
Jan

Recently we have had several queries regarding personal accident and workers compensation insurance cover for trainers, track riders and jockey’s riding work at private training properties. Regardless of any assumptions as to liabilities, trainers should make themselves aware as much as is possible as to their rights and responsibilities in this area of law.

Firstly under the workers compensation act in Western Australia, any relationship that can be construed as employer/employee relationship regardless (but most likely for pay) must be covered by a workers compensation insurance policy taken out in this case by a trainer. This policy which every licensed trainer must have, will cover every person who does any work paid or otherwise under the direction or on behalf of the trainer, or on occasion for the company deemed to employ a trainer in the act of racehorse training. This will include freelance riders, strappers and other ancillary workers such as float drivers, volunteers etc.

The slight variation to this is where the RWWA workers compensation policy takes responsibility for jockeys and apprentices riding in races, trials or trackwork at RWWA approved or controlled training centres and for apprentices working or riding at their host trainer’s stable or property. Jockeys and possibly apprentices not indentured to a trainer but riding work on a private property, beach or bush work are not therefore covered by RWWA’s policy and that liability is then taken up by the trainer’s policy.

In the event of a claim for injuries sustained away from a training track by a jockey made upon a trainer’s workers comp. policy. The trainer will have all the responsibility for managing that claim as you would for any other staff including ongoing regular payment of wages to that jockey prior to reimbursement by your insurer.

The practicalities here are this:

  • Under the act amendment in 2012, a Jockey will be entitled to a weekly or fortnightly payment assessed at 85% of their average earnings over the previous 12 months, capped currently at about $2600/week. This will require a trainer to make this sort of payment regularly prior to being reimbursed by the insurer.
  • Obviously a lot of Jocks earn this sort of money plus and so they need to be aware of the financial losses they could make and perhaps carry an income protection insurance of their own. Others would make less than this especially after costs of travelling to race meetings are factored in, so in some cases a $2k earn a week without having to fly to race meetings might be pretty attractive. Regardless under the law, you the business owner are ultimately responsible.
  • All policies on renewal have an estimate of wages to be paid in the following insured year. As the policy holder you declare what you have paid in wages in the year compared to your estimate and pay or receive a rebate for the difference in premiums calculated. You then estimate the wages anticipated going forward and pay a premium on that figure.
  • Where a trainer has jockeys riding work unpaid, it is difficult to practically estimate a cost should one be injured, however building a buffer for a few thousand dollars extra on top of other staff wages into the premium might lessen the shock the following renewal should a rider be injured when working for you.
  • Have a conversation with Jockeys who ride work at your place, make sure they understand what Workers Comp will cover them for and encourage them to look to personal accident cover for themselves as well, especially when they are high earners.
  • The one thing you will ultimately not be able to avoid are your responsibilities under the W.C. act so ensuring you are adequately insured is good business.

What else do I need to know?

Trainers who are operating their business as sole traders or in partnerships under Australian Tax Law are deemed under the compensation act as not being eligible for WC coverage. Those who are employed by a company or trust and are effectively ‘paid’ a salary by that company or trust who is also the insured are possibly covered by workers comp.

Therefore trainers are strongly advised to carry personal accident income protection insurance and to get sound advice from a broker or financial expert to ensure adequate financial and medical cover in the event of an injury.

Care should be taken when selecting an insurance cover to ensure it will do what you think it will in the event of a loss of time injury. Most covers will have a built in compensation figure for certain injuries, few will have a medical expenses coverage in which case you will need to rely on medicare and private health cover for patching you up.

Insurance companies do not work for the benefit of a client, in fact the opposite. They work entirely to be profitable, therefore it is their interest to offer products that reduce the chances of them having to pay you in the event of loss of time injury or illness.

Brokers and advisers are supposably working for you, the client and so using one rather than dealing with an insurance company direct might be advisable. A good rule of thumb is to obtain cover that will cover you for ‘your exertion’ rather than the end profit or loss of your business. This means in the event of you being unable to physically work in your business you still receive payment to cover some overheads akin to a salary or wage. Essentially an agreed sum, regardless of what other forms of income you may still receive. It’s important you are clear on what a policy will provide for you under what circumstances.

A couple of things to consider

  • What do I need to survive if I can’t work? Will my business continue if I’m not in it and for how long?
  • What does the family need? Does life benefits provide enough if I pay it?
  • A conversation with a broker or insurance company needs to clarify what you will get under what circumstances and when.
  • Australian owned and operated insurers are subject to Australian consumer law, some foreign operated or parented insurers could disappear or make claiming incredibly difficult.
  • Gather as much advice and information about a product or policy. If you have several through Superannuation, Life Insurance, Personal accident etc. be sure they will all
  • Consider building the costs of being adequately insured, particularly personal accident into your fee structure. The job we do is not without risk, someone needs to be paying the cost of that cover.

The Australian Trainers Association (ATA) has an expert adviser on all insurance matters, RWWA has a preferred broking company doing workers compensation and there are a number of reputable brokers and financial advisers in the West Australian market place.

Contacting any or all of these and discussing your personal insurance needs is strongly recommended because being “fore warned is to be fore armed”.

Trainers who have any questions are welcome to contact us here at WARTA and we’ll be happy to point you toward expert advice.