Roofing Insurance- Workers Compensation
Workers Compensation for Roofers
Workers Compensation for Roofers is one of the most difficult lines of business for insurance companies to make money at. The obvious reason for this is that when there are claims, they tend to be very severe. This makes it exceedingly difficult for the insurance companies to price for and there is naturally a ton of risk. There are two ways for Roofing Contractors to be insured. The first is to pay premiums for your employees to be up on the roof working for you. The second is to have sub-contractors do your work and pass the cost on to them.
1.Paying premium for W2 employees.
Many people do not like this option for it is expensive. Workers compensation rates for roofing vary from state to state, but the National Average is around 33% of payroll before taxes. This is BIG; however, if you price for it, you can pass this cost onto your customers. A good idea for this is to add 40% onto your labor cost and put this money into a separate account. Our recommendation would be to go to 50% for forced savings with the understanding you might not have 100% collectibles. Many businesses are scared of the premiums in doing this; but there are some advantages in that you can control your team being W2 employees and know your costs. There are no surprises at the end of the year with this option.
2.The second option is to buy a “Ghost” policy or “If Any” policy.
This means you are excluding yourself from coverage and everyone you hire is a sub-contractor WITH workers compensation. The sub-contractors you hire can also have an “if any” or “Ghost” policy, but they must have insurance and MUST have a certificate of insurance adding you on as an ADDITIONAL INSURED. The reason you need to be an additional insured is that you are passing the risk from your company to your sub-contractor’s insurance company. This means if they or their employees get hurt on your job, the coverage will fall under them. If you hire an UN-INSURED SUBCONTRACTOR and they are injured on your job. THEY ARE COVERED FOR UNDER YOUR INSURANCE POLICY. This means at the end of the year, if you can’t prove you have insurance for them, you have to pay the premium on AUDIT. If not planned for, this comes straight out of your pocket.
Uninsured Sub-Contractor Payroll = Employee = You pay premium
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Workers Compensation is an expensive cost, but it is a necessary cost in running any contractor business. If you plan it through up front, it does not have to be a killer on audit. Please feel free to give us a call anytime for a quote or for more information at 855-340-1099. We hope to hear from you and best of luck with your business.