OhioBWC - Basics: (Policy library) - File


Policy Name:

Application for Coverage (U-3)

Policy #:


Code/Rule Reference

Ohio Revised Code (ORC) 4123.01 Ohio Administrative Code (OAC) 4123-14-01, 4123-14-02, 4123-17-02 ,4123-17-13, 4123-17-26, 4123-17-69

Effective Date:

January 1, 2019


Ronald L. Suttles, Chief Employer Services


Employer Policy


All policies and procedures regarding Application for Coverage (U-3) and Coverage Initiation that predate the active date of this policy.


Revised April 25, 2019; March 5, 2019; July 22, 2016; and July 27, 2006.

Review Date:

January 1, 2024



I.      Policy Purpose


The Bureau of Workers’ Compensation (BWC) provides workers’ compensation coverage for Ohio employers. The Application for Coverage (U-3) policy ensures that an employer’s request for coverage is processed in accordance with all applicable laws and rules.


II.    Applicability


This policy applies to BWC Policy Processing/Underwriting, Field Services, Cash Control, Employer Call Center, Claims, Employer Compliance, private employers (PA employers), public employer taxing districts (PEC employers) and authorized representatives.


III.   Definitions

A.    Active date of coverage: The date BWC receives a completed U-3 with the application fee.

B.    Application fee: A nonrefundable fee of $120.00 which is equal to the minimum administrative annual charge as set forth in OAC 4123-17-26.

C.   Application for Ohio workers’ compensation coverage (U-3): Form used by an employer to apply for workers’ compensation coverage.

D.   Quote number: A temporary number assigned to an application and used for tracking purposes.

E.    Blended Rate: The actual rate that appears on the employer’s Estimated Annual Premium notice and is used to calculate workers’ compensation premiums. The rate is the sum of the base rate or modified rate, the administrative cost (AC) assessment, and the Disabled Worker’s Relief Fund (DWRF) and DWRF2 assessments. The blended rate is also used for the annual True-up payroll filing.

F.    Coverage Initiation: BWC’s process for determining when an application for coverage requires a new policy. A new policy will not be issued when the employer applying for coverage is essentially the same or similar to an existing policy.

G.   Elective coverage: Optional coverage for business owners or ministers in one of the following categories:

1.    Sole proprietor;

2.    Partnership;

3.    Limited liability company acting as a sole proprietor;

4.    Limited liability company acting as a partnership;

5.    Family farm corporate officers;

6.    Individual incorporated as a corporation; and

7.    Ordained or associate ministers of a religious organization.

H.   Estimated annual premium (EAP): The annual estimate of premium utilizing the estimated payroll and approved rates. BWC’s premium estimates are based on the most recently completed policy year of actual payroll multiplied by the employer’s blended rate for the policy year being estimated. New employers applying for coverage are required to provide twelve (12) months of estimated payroll on the U-3 form.

I.      Experience modification (EM): An adjustment factor applied to the base rate of the manual classification.

J.     New employer: A new business entity with employees for which any of the following is true:

1.    The employer is a new business entity in Ohio; or

2.    The employer is an out of state employer that has not had prior operations in Ohio and has not had prior workers' compensation insurance coverage in Ohio.

K.    No coverage penalty: Assessment calculated by BWC upon determination that an employer has failed to comply with coverage requirements as set forth in ORC 4123.01(B)(2).

L.    Policy number: A number assigned by BWC to an employer’s business operations after an application has been finalized.

M.   Predecessor: The employer associated with the business prior to the succession.

N.   Successor: The employer associated with the business after succession.

IV.  Policy

A.    Application submission.

1.    Employers must file a U-3 form with BWC:

a.    Employers may apply online at BWC’s website.

b.    Completed applications may also be mailed to BWC or dropped off at a local service office with a money order or check for the required application fee.

2.    The employer must provide the following information when applying for coverage as set forth in OAC 4123-17-13(A)(1).

a.    Legal name and business entity type (e.g., corporation, L.L.C., sole proprietorship, partnership);

b.    Employer address;

c.     Employer’s Federal Employer Identification number (FEIN) or, if applicable, Social Security Number (SSN);

d.    Description of employer operations, including:

i.      A description of the work done or industry pursued by the employer;

ii.     The estimated average number of employees in each kind of work; and

iii.    The estimated wages of employees in each kind of work over the next twelve (12) months.

e.    Information related to whether the applicant for coverage has purchased an existing business or has another associated policy;

f.      Name of the owner(s) or corporate officer(s), and when applicable for elective coverage the name of the sole proprietor, partners, or minister (refer to Elective Coverage policy for further details);

g.    Signature of the person completing the U-3 form; and

h.    A non-refundable application fee of $120.00 equal to the minimum administrative annual charge as set forth in OAC 4123-17-26.

3.    BWC assigns a temporary quote number to the employer’s U-3. This number is used to track the application throughout the remainder of processing and appears on all correspondence sent to the employer or its authorized representative.

4.    Incomplete applications.

a.    BWC contacts the employer to obtain any missing information.

b.    If the employer fails to provide the required information, BWC:

i.      Will deny the employer’s application outlined in OAC 4123-17-13(A)(2);

ii.     May consider the employer as non-complying as referenced in OAC 4123-14-01(A); and

iii.    Will recover penalties and payments from the employer as set forth in OAC 4123-14-02.

B.    Application evaluation.

1.    BWC reviews the application to determine if the employer has an existing policy. The evidence considered to determine whether a new policy should be issued includes, but is not limited to:

a.    SSN or FEIN;

b.    Business name;

c.     Pursuit of industry;

d.    Location of operation;

e.    Other Ohio workers’ compensation policies and other principals associated with all or part of the business operation;

f.      Purchase or sale agreement; and

g.    Interchange of labor.

2.    If BWC identifies an existing policy, BWC will deny the application and invoke Coverage Initiation. BWC may:

a.    Transfer or combine the prior risk coverage to the employer as set forth in OAC 4123-17-02;

b.    Require the employer to assume any outstanding obligations under the prior risk coverage;

c.     Require the payment of outstanding obligations or the establishment of a payment plan prior to granting new coverage; and

d.    Impose other actions authorized by law which BWC deems appropriate.

3.    BWC will assign manual classification(s) based on the duties performed.

4.    An employer that has a dishonored application fee payment, prior to the application being finalized, is required to submit a new U-3 and application fee.

5.    Requests received from a temporary agency for the allowance of up to ten policies by industrial pursuit will be processed according to the Temporary Labor Services policy.

6.    For policies issued on or after July 1, 2015, for PA employers and January 1, 2016, for PEC employers, BWC will calculate and charge a No Coverage Penalty if the employer filed the U-3 after the date one or more employees were hired to work in Ohio.

7.    Employers questioning the No Coverage Penalty may contact BWC. BWC may adjust or waive the penalty if the employer can document that there were no employees prior to the active date of coverage.

8.    For any claim that occurs prior to the active date of coverage:

a.    BWC will bill the employer dollar for dollar for costs billed to the claim; and

b.    The employer may be referred to the Employer Compliance Department for a compliance audit.

C.   Finalizing the U-3.

1.    BWC will finalize an employer’s application for coverage when all required information has been provided, and there are no coverage initiation issues.

2.    Once an application is finalized by BWC the employer’s quote number is converted to a policy number which will be used to identify the employer.

3.    BWC will issue the following to the employer:

a.    A Certificate of Ohio Workers’ Compensation Coverage.

b.    A Notice of Estimated Annual Premium and Premium Installment Schedule letter which identifies:

i.      The estimated twelve (12) month payroll from the U-3 used by BWC to calculate the employer’s estimated premium due;

ii.     Individuals who have elected coverage;

iii.    The manual classifications in which the employer’s payroll is reportable;

iv.   The blended rates for each of the manual classifications identified;

v.     The employer’s applied EM used in determining premium due;

vi.   The employer’s estimated premium due for the applicable policy year; and

vii.  An installment schedule that outlines installment due dates and premium amounts. (Refer to Prospective Billing Installment Payments for further details).

4.    Employer coverage.

a.    BWC will issue a Certificate of Ohio Workers' Compensation Coverage. The certificate is only valid if premium and assessments, including installments, are paid by the applicable due date.

b.    BWC will prorate the estimated annual premium. The employer will be billed in equal installments for the remainder of the current policy period. The employer is responsible for all installment payments for the remainder of the policy year.

c.     BWC will apply a credit in the amount of the application fee to the employer’s first installment payment.

d.    Coverage will become effective upon timely receipt of the first premium installment payment, retroactive to the date and time of receipt of the application:

i.      For walk-in customers, “the date and time of receipt of application” is determined by the BWC time and date stamp.

ii.     For online applications, “the date and time of receipt of application” is determined by the website time indicator.

iii.    For mail-in applications, “the date and time of receipt of application” is 12:01 a.m. on the date BWC receives the U-3 and the application fee, as indicated by the BWC time and date stamp.

D.   Resolution of Complaints.

1.    Employer complaints must be processed under the General Employer Complaint Policy.

2.    BWC has identified specific extenuating circumstances that apply to Application for Coverage. These extenuating circumstances are outlined in section IV.E. below.

E.    Specific extenuating circumstances for which relief may be granted.

1.    Earlier Effective Date. BWC may provide relief to the employer under the following extenuating circumstances:

a.    An out-of-state employer was misinformed by its insurance agent/broker that the “all states” endorsement on its insurance policy covered Ohio workers’ compensation. Merely asserting the mistake does not establish this extenuating circumstance. The employer must have written proof of the misinformation the employer was provided.

b.    Bank error or delivery service error in processing an employer payment or delivering a payment to BWC. This circumstance may also be used if the post office failed to forward or significantly delayed forwarding the employer’s mail.

i.      Such errors must be documented by letter or sworn statement from the bank or delivery service.

ii.     The bank or delivery service error must be the sole reason for the untimely payment or reporting.

2.    Coverage Initiation. BWC may provide relief to the employer if the employer or their authorized representative provides documentation such as:

a.    A different federal identification number;

b.    Different business bank checking accounts;

c.     Different operating manuals;

d.    Different ownership; or

e.    Significant gap in time between ceasing operations and purchase effective date.

3.    No Coverage Penalty.

a.    BWC may grant relief of the penalty if the employer meets all of the following criteria:

i.      The request must be in writing;

ii.     The employer must provide actual payroll for the no coverage period to be used in calculating the revised no coverage amount; and

iii.    There must be no claims in the no coverage period.

b.    BWC will waive penalty amounts of $120 or less provided the actual payroll was submitted as outlined above.

4.    Successorship Liability. Refer to the Successorship policy on complaints related to this topic.

5.    Later Effective Date of Coverage. BWC may change the effective date of coverage upon request of the employer if the employer meets the following criteria:

a.    The employer provided a date for employees first earning wages in Ohio after the date the U-3 and application fee was received; and

b.    The employer can provide documentation establishing the date employees first earned wages in Ohio.