Workers’ Compensation Insurance coverage for contractors and builders pays for on-the-job injuries to employees and uninsured subcontractors of the contractor.
Workers’ Compensation Pays the Following Benefits:
- Medical bills (past and future) up to an unlimited amount
- Lost wages (usually based on 66 2/3% of the average weekly wage for the past year)
- Lump sum payment for permanent disability and disfigurement
- A death benefit in the event the worker dies
This insurance policy also contains a little-used coverage known as Employers Liability, which provides protection against certain rare lawsuits where an injured worker circumvents the Workers’ Compensation system in an attempt to collect more money.
The cost of Workers’ Compensation for builders and contractors is based on a rate per $100 of payroll paid to employees or uninsured subs and varies per the type of work to be performed (ex: framing, interior trim, painting, etc.) Additional factors such as expense constants, experience modification, assigned risk adjustment premiums, scheduled debits and credits, and minimum premiums may impact the final premiums.
The final premium of a Workers´ Compensation policy is subject to an audit of your financial and tax records by a representative from the insurance company. Shortly after the annual policy term expires, the auditor will determine the proper classifications as well as the actual payrolls paid to employees and the amounts paid to your uninsured subs.
Many contractors who buy their Workers’ Compensation coverage from unethical insurance agents who provide low-ball quotes based on inaccurate classifications and/or suppressed payrolls are hit with staggering additional premiums. These additional premiums are owed within 30 days of the audit.
If these additional premiums are not paid, the insurance carriers will hire debt collectors to pursue collection. Failure to pay can also result in cancellation of your current workers compensation policy.