What is Contractors’ Workers’ Compensation?

Contractors’ workers’ compensation is a state-regulated, no-fault insurance system that pays benefits to employees injured in the course and scope of employment.

Why do I need it?

Contractors’ workers’ compensation insurance protects employers from financial liability incurred by an employee’s work-related injury or illness. It helps injured employees recover so they can return to work as soon as possible.

What does it Cover?

Coverage varies by state, but most policies provide the same basic benefits for medical expenses resulting from a work-related injury, disease, or illness and compensate for lost wages if an employee qualifies.

Employee benefits are to be determined by the severity and type of the injury or illness sustained:

Medical Benefits – Pays for examinations, treatments, and rehabilitation.
Income Benefits – Pays for lost wages while an employee is recovering.
Death Benefits – Pays lost wages to the family of a deceased employee.
Burial Benefits – Pays a portion of funeral expenses.

Do I Qualify?

Some contractors may need assistance obtaining a workers’ comp policy based on their operations. Most states have an “Assigned Risk or High-Risk Pool” that will underwrite businesses unable to purchase coverage in the private market.

How much is it?

Rates depend on the type of work performed, claims history, territory, and prior or continuous coverage.

There are three main factors used to calculate contractors’ workers’ comp premiums:

• Your payroll amount
• Your employee’s operations
• Your claims history

The basic formula for calculating contractors’ workers’ comp premiums is:

Employee Classification Rate X Employer Payroll (Per $100) X Experience Mod Rate = Workers’ Comp Premium

Is it required by law?

Most states mandate business owners with employees to carry contractors’ workers’ comp insurance. Violations for non-compliance vary by state and can result in severe penalties and fines.

We encourage employers to visit their local municipal or state authority to verify workers’ compensation rules and regulations before commencing operations.

Is there an Annual Audit?

Most carriers require an annual audit once the policy expires to compare the estimated payroll with the actual payroll and determine if there’s an additional premium owed or if the overpaid premiums are to return to the insured.

What are my Payment Options?

Our programs offer various payment options when purchasing your contractors’ workers’ compensation policy.

Full Payment Option – Pay the estimated premium with one payment.
Direct Bill Option – Pay the estimated monthly premium to the carrier directly.
Pay as You Go – Pay the premiums based on actual payroll figures, not estimates.

Why go with Fairbanks Insurance Brokers?

By retaining excellent relationships with the nation’s most competitive insurance carriers, we can consistently offer affordable insurance products for the contractors we represent. When you allow our dedicated team to service your insurance needs, your reward is more time to focus on what you do best!