Changing Classes or Rates

In the Unfair Trade and Claims Practices Act in Tennessee law, adding a class code after the policy expiration is defined as an unfair trade practice.  This section usually comes into play at audit when the auditor tries to add a new classification to the policy. An auditor may move payroll among the classifications listed on the policy, but he may not add a new class to the expired policy without the written consent of the insured. This code section applies to all commercial risk policies, not just workers' compensation.

Tennessee Code § 56-8-104 Unfair Trade Practices Defined.

The following practices are hereby defined as unfair trade practices in the business of insurance by any person:

    (17) Changing Classification and Rate After Policy Expiration or Renewal.

    With respect to commercial risk insurance, making a change in the classification or rates either more than one (1) year after the policy's renewal  date or the expiration date if the policy was not renewed without the written consent of the insured, provided that no consent is necessary if the change is in the favor of the insured. This subdivision (17) does not apply where the insured has failed to cooperate, given misleading information, or made material misrepresentations or omissions;