Why do you need Workers Compensation for sub-contractors? While the benefits of Builder’s Risk and Workers Compensation are clear cut, one question remains: Is Workers Compensation your responsibility when it comes to sub-contractors?
Business owners purchase insurance to limit liability against different risks. To cut on costs you may be tempted to pick one policy over another. This may be detrimental if the policies are not interchangeable.
In this article, we will look at the benefits of Builder’s Risk and Workers Compensation, and why you may need both.
Workers Compensation Insurance
Workers Comp limits liability and financial responsibility if a sub-contractor is injured during the job.
The laws that determine if a worker is a sub-contractor or an employee vary from state to state. So how do you determine the difference? Most states classify workers who receive a W-2 tax form as employees. Those who receive a 1099 form are classified as contractors.
However, depending on the state you may still be required to get Workers Compensation insurance for those with the 1099 form. The worker is considered a subcontractor if:
- You pay them
- You hire and dismiss them
- You exercise control over how and when the work is performed
What benefits does the policy offer to my business?
Medical coverage for occupational injury
If a sub-contractor gets injured while on the job, the insurer will cover:
- Doctors’ fees
- Physio therapy
- Medical tests
- Medical equipment e.g. prosthetic limbs
For example, a sub-contractor falls off a ladder while painting and breaks their leg. You will be reimbursed for any expenses after a successful Workers Comp claim is made.
Workers Compensation for sub-contractors compensates for lost wages
Your Workers Comp policy replaces the lost wages and will make sure that a sub-contractor doesn’t suffer financially during their recovery period.
For example, the sub-contractor will receive a percentage of their regular wages during recovery.
Disability wages replace income lost due to injury. The sub-contractor is spared financial setbacks from unemployment.
Provides rehabilitation benefits
Workers Compensation for sub-contractors is beneficial to sub-contractors who would like to change jobs or switch careers after injury.
Your insurance caters to the costs associated with learning a new skill.
Builder’s Risk Insurance
Unlike Workers Compensation for sub-contractors, Builder’s Risk covers damages to a structure under construction. A basic policy will also include loss and damage to materials, equipment and temporary structures. Some policies offer additional covers such as: debris removal, loss of profit, damage of equipment, and temporary structures.
Builders Risk covers:
It always pays to protect your business from the financial liability from damages caused by sudden fire. For example, electrical equipment catches fire due to faulty wiring. Insurance will cover the repairs, cost or wages and damaged materials
Vehicle and aircraft damage
Working close to an airstrip or highway poses danger to your site. During periods of low visibility or slippery roads, vehicles may drive through your construction site. For instance, bad weather conditions cause a helicopter to crash land on your building site causing widespread damage.
Coverage against theft or vandalism
Vandalism and theft of building materials or equipment is rampant in most job sites. For example, a painter may have to paint over graffiti.
Get coverage today
Workers Compensation for sub-contractors is just as important to your business as Builder’s Risk insurance. Their benefits are not interchangeable. We will help you secure both policies. Get in touch with our insurance agents at Contractors Liability call 888-676-0923. We can help.