What is Contractor Workers’ Comp?
Also, referred to as Workmans’ Comp, Workers’ Compensation, or simply Work Comp,
this is the type of insurance coverage that every employer dreads buying. Contractor Workers’ Comp is regulated by the state in which you conduct business and is there to protect your employees. The requirements will vary state by state but the policies typically provide the same basic coverages.
What does it Cover?
This coverage is intended to pay medical expenses resulting from a work-related injury or work-related disease or illness. It will also compensate for lost wages if the employee qualifies. The benefits employees receive are based on the severity and type of the injury or illness:
As with any injury related insurance, there is a considerable amount of fraud committed and the insurance companies will investigate suspicious claims diligently. Insurance carriers that insure very large corporations will have experienced claims specialists monitoring every claim filed. The types of claims that will absolutely be denied include:
Do I Qualify?
Since some business classes find it difficult to obtain workers’ compensation, such as a roofing company, most states have an “Assigned Risk or High Risk Pool” that will underwrite businesses unable to find coverage in the private market. Many states have set a “trigger” that makes workers’ compensation insurance mandatory for the business. Usually the “trigger” is the amount of employees (full time and part time) that are employed byt the company.
How much is it?
Rates will depend on the type of work you are performing. Electricians and Automatic Sprinkler Installers tend to be on the lower end of the spectrum while Roofers and Solar Contractors end up on the higher end of the rate scale.
There are three main factors that go into setting Contractor Workers’ Comp premiums:
The premium rate is expressed as dollars and cents per every $100 in payroll for each employee’s class code for the operations that each is performing.
A basic formula for calculating Contractor Workers’ Comp premiums is below:
Employee Payroll (per $100 paid) x Classification Rate x Experience Modifier = Policy Premium
What are my Options?
Because of the access that Fairbanks Insurance Brokers has too many of the top-rated and most competitive markets, we are able to provide options for you:
What if I get caught Without it?
It is no laughing matter-
California law is very strict when it comes to protection for employees against work-related injuries or illnesses. The law requires employers to carry Workers’ Compensation insurance even if they have only one employee. If you are in the roofing business and have no employees, you must still carry workers’ comp. That’s the law, and if you are caught breaking it, there are consequences:
But wait, there’s more! If your business decides to risk not having contractor workers’ comp as required by the California State Labor Commission, and you continue operating your business while remaining uninsured, there’s a lot more that can happen to you:
Additional Premium Audit
If you, as a sub-contractor, are working for a General Contractor and are unable to provide sufficient proof of state mandated workers’ compensation coverage, your General Contractor will be required to pay an additional premium to their insurance company and will most likely deduct the additional premium from any compensation due your company. Or, if your company has already received payment, the General Contractor is likely to file a civil suit against your company to recoup the additional premium they were forced to pay on your behalf.
Yes, workers’ compensation is a pain, and yes, depending on your business classification, it can be very expensive, but the penalties for not obeying the labor laws in California are designed to put you out of business.
How do I Pay?
Fairbanks Insurance Brokers has a variety of different payment options to choose from when purchasing your Workers’ Compensation policy.
Why run with Fairbanks Insurance Brokers?
By retaining excellent relationships with the most competitive insurance carriers, Fairbanks Insurance Brokers can consistently offer competitive insurance products for the contractors we represent. When you allow our dedicated team to service your insurance needs, you are rewarded with more time to concentrate on what you do best!