How Does Workers Comp Insurance Protect Contractors?

September 2018
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Working in the high-risk industry of construction means that you are more susceptible to accidents or injury than the average Joe. And so are your employees.

Should you or someone who works for you suffer from an injury on the job, medical bills and lost wages can add up quickly.

It is not uncommon for an injured employee to bring a lawsuit against their employer if workers’ comp isn’t in place. This can result in a long, unpleasant legal battle.

To protect both employees and employers from the high costs associated with on-the-job injury, many states require that contractors who have employees – and even some who don’t – carry workers’ comp insurance coverage. Neglecting to comply can not only result in fines, it can sometimes keep you from getting licensed to work in your state.

Learn how workers’ comp insurance protects contractors and their employees in the high-risk industry of construction.

Protect Your Employees

Most construction workers will have at least one work-related injury during their career. You and your employees are, unfortunately, no exception to this statistic.

The greatest risks for injury in the workplace are accident known as the Fatal Four:

  • Falls
  • Struck by Object
  • Electrocutions
  • Caught-in/between

These injuries are the most likely to occur in any type of workplace, but the hazard is even greater for those working in high-risk industries.

Construction workers accounted for one in five worker deaths in 2016.

So the question isn’t if an accident will occur but, rather, what will you do when it does?

Are you prepared to pay out of your business or personal bank accounts to cover the costs of an employees injuries? The answer is likely ‘no.’ With workers’ compensation insurance you won’t have to.

Workers’ comp coverage will help pay for:

  • Wages lost during recovery
  • Medical expenses
  • Disability expenses
  • Funeral expenses in the event of a fatality

Certainly, you don’t want your employees struggling to pay out-of-pocket for mounting medical bills at the same time they’re missing work pay to recover. But paying the costs out of your account could put your business behind or, worse, under.

Protect Your Assets

Even if you decided that the accident was due to the employee’s negligence and felt that you shouldn’t have to pay a penny for his mistake, a judge may not agree.

While not all accidents are likely to result in a ruling that favors the injured party, lists the following as examples that fit the criteria for a work injury lawsuit:

  • The injury or illness was caused by a third party
  • The accident was caused by a defective product or exposure to a toxin from a particular manufacturer
  • Injured as a result of employer’s negligence or misconduct
  • The employer does not have workers’ compensation insurance

Note that last point. Contractors who don’t carry workers’ comp coverage are at risk of being found at fault in a work injury lawsuit.

If the judge rules in favor of your employee, the legal battle may result in climbing costs. Not only will you be paying to cover your employee’s medical bills, you could also have to come up with money for lawyer fees, settlements, or judgments.

Your employees work hard for your business. Make sure they are protected, should an accident occur in the workplace.

Protect Your Business

While workers’ comp coverage is an important safety net for you and your employees, in many instances it may be necessary for your business to even operate legally within your state.

Criteria for workers’ comp insurance requirements vary state-by-state, but most do require it in one form or another.

In California, for example, you must provide one of two documents to the California State License Board in order to receive a contractor license:

  • If you have one or more employees: a valid Certificate of Workers' Compensation Insurance or a valid Certification of Self-Insurance from the Department of Industrial Relations
  • If you have no employees: a signed exemption, certifying that you have no employees.

Roofers are the exception to this rule, as they need to provide proof of workers’ comp coverage even they are the sole employee of their contractor business.

However, in Texas workers’ compensation is optional, with the exception of construction companies that are contracted for government entities who are required to carry workers’ comp coverage.

While the requirements vary from state-to-state, most do require workers’ comp in one form or another for a construction business to operate.

Staying compliant keeps you in business.

From protecting employees to protecting your bottom line, workers’ comp coverage is as important an asset as your construction business can have. Can your construction business afford to pay out when unexpected accidents occur? With workers’ compensation insurance, it won’t have to.

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