Workers Compensation

As a business owner, you do everything you can to protect your employees from potential dangers, but do you have workers compensation protection? Most business owners understand that workers compensation is important, but did you know that if you have employees, it is required by law for most businesses to have coverage?

Workers compensation is a type of insurance coverage that protects your employees in case of injury or disease during the course of employment. Policies can provide coverage for:

  • Medical expenses
  • Lost income/wages
  • Rehabilitation costs
  • Death benefits
  • And moreā€¦

Why your business may need Workers’ Compensation Insurance?

State Requirement. Depending on number of employees you have, State law may require you to have Workers’ Compensation Insurance for your business.

Contract Requirement: It is common for a business/general contractor to require that all sub-contractors have a Workers’ Compensation policy The business/general contractor typical does not require this out of concern for you and your employees but out of concern over their own exposure for liability if a sub-contractor or sub-contractor employee should get injured on the job. Additionally, the company that provides Workers’ Compensation to the business/general contractor will charge them for uninsured sub-contractors.

Financial. Aside from the legal and contractual requirements, Workers’ Compensation protects the business owner from the financial impact of an employee or uninsured sub-contractor getting injured on the job.

Common Misconceptions:

I do not need Workers’ Compensation because I have less then the minimum number of employees that the State requires for Workers’ Compensation.

Regardless of a “minimum number”of employees that the State may set before requiring this type of insurance, WHT&S recommends to a business owner to have Workers’ Compensation insurance even if they employ only one person or an occassional helper. WHT&S recommends that a business who works with sub-contractors have Workers’ Compensation insurance as well. Generally, If that employee should get injured on the job, no other type of insurance will respond if the injury leads to a law suit against the business owner.

The General Contractors I work for deducts the cost of Workers’ Compensation from my check. This gives me Workers’ Compensation coverage doesn’t it?.

While this may sound convenient for a sub-contractor; a general contractor is not providing an opportunity to buy this coverage out of concern for the sub-contractor and the sub-contractor’s employees. A general contractor will be charged for uninsured sub-contractors by the insurance company who provides tthe general contracor’s policy because of the potential liability that may arise from an uninsured sub-contractor getting injusred on the job. The general contractor is recouping his cost by charing the sub-contractor.

This does not mean that the sub-contractor or the sub-contractor’s employees has Workers’ Compensation coverage. Workers’ Compensation coverage is for the employees of the policy holder. If you aren’t deemed an employee at time of injury, you may be excluded from any Workers’ Compensation Benefits.

Additionally, the sub-contractor does not have the protection against liability that an employer typically has under a Workers’ Compensation if an employee of the sub-contractor should get injured on the job. These protections are not afforded by other types of insurance policies.

I sub-contract out all the work my business performs and have no employees. I do not need Workers’ Compensation Coverage.

While State regulations may not require you to have Workers’ Compensation insurance, you do have an exposure to financial loss that may only be covered by a Workers’ Compensation policy. If a sub-contractor becomes injured on the job, and has no Workers’ Compensation insurance, that sub-contractor may bring suit against the General Contractor. The legal definitions of “sub-contractor” and “employee” can have a lot of gray areas. While that person may have the title of :sub-contractor”, a Civil Court could determine that the relationship between the business and the individual is that of employer/employee. A Workers’ Compensation policy is the only type of coverage that will respond to such a suit.

Having a certificate of insurance from a sub-contractor does not alleviate the exposure of the General Contractor. A sub-contractor’s insurance can be cancelled for non-payment of premium without the knowledge of the General Contractor. If an employee of a sub-contractor becomes injuured and there is no Workers’ Compensation, his legal representative will advise him/her to bring suit against the sub-contractor and the general contractor. In many circumstances, the only type of coverage that will respond to such a suit will be a Workers’ Compensation policy. If the general contractor does not have such coverage, he/she may find they are paying out of their pocket to answer such a suit.

A Workers’ Compensation policy for a General Contractor who has no employees does make perfect sense and give the protection that the General Contractor needs at a low cost.

Why it would be good to have a WHT&S representative review your present Workers’ Compensaiton Policy:

No longer a “new” business? When you started out as a new business, your only recourse to obtain coverage was to obtain it hrough the State Plan at an expensive rate. You may now have enough history to obtain coverage directly from an Insurance Company at a lower cost.

Employees classified correctly? The way your employees may be classified could be incorrect causing for a higher premium being charged.

Experience Rate Modification correct? Depending on the premium size of your policy, and the length of tme you have have had Workers’ Compensation insurance, you may qualifiy for an “Experience Rate Modification” (ERM) calculated by NCCI (National Council on Compensation Insurance, Inc.) which may result in lower premiums.

If you are already under an ERM, it is always good to examine, for correctness, the claims that make up the ERM. It is also wise to check if your current policy reflects your current ERM issued by NCCI (National Council on Compensation Insurance, Inc.). ERMs can change on a annual baisis and at times the policy is not updated to reflect the change.

Does your present company have high rates? Premium rates can vary from company to company. Are you paying more for your insurance then you need to?

WHT&S provide for this important coverage through:

    • Workers’ Compensation Policies from Insurance Companies licensed to do business in the State where coverage is sought.
    • Group Self Insurance Associations licensed to do business in the State where coverage is sought.

Virginia Workers Compensation Resource: The Virginia Workers’ Compensation Commission

Give a WHT&S Representative a call to discuss your workers compensation insurance needs.