A Guide to Contractor’s Compensation for Small Business

​Workers' compensation, or contractors' compensation, provides replacement income for a worker who has experienced work-related illnesses or injuries. This insurance also pays for his medical expenses. Here's what every small business owner should know about contractors' compensation.

Background
About a hundred years ago, the US Congress formulated the first workers' compensation laws. When an employee gets injured or sick, then there's only one solution – file a case against the employer in court. The case is negligence. In that case, legal action becomes a process that is difficult, tedious, and expensive. Nowadays, in exchange for paying for contractors’ compensation insurance, employers need not defend themselves against lawsuits anymore. Every state has its own contractors’ compensation laws.

Who Should Have Coverage
You will need contractors' compensation insurance if you have independent contractors working for you. Even though an independent contractor operates a business of his own, your company is still liable for whatever injury or illness that their workers would experience while working for you. Contractors' compensation coverage should include casual laborers, or those working only for a short period. Aside from construction workers, it also provides farm and domestic laborers.

Obtaining Coverage
Every state has its own rules on how and where employers should buy contractors’ comp insurance. In some states, employers can purchase this insurance through a state fund that monopolizes the issuance of this insurance in that particular state. However, if your state allows private insurance, you may discuss with your insurer how you can save on the premiums.

The Cost of Contractors’ Comp
Although varying from one state to another, contractors' comp depends on several factors. These factors include the size of the employer's payroll and the number of past settled claims. Additional considerations include the nature of the industry and the specific state benefits. However, one should understand that covering contractors and construction workers in hazardous occupations must cost much higher than insuring a roofer or one who does mere clerical work.

The Consequences of Not Having Contractors’ Comp Coverage
If you didn’t provide contractors’ compensation coverage, you should understand that an employee who gets injured on the job has the option to file charges against you. The lawsuits can be costly and can be much more expensive than getting contractors’ comp. Aside from that, your state workers’ compensation agency will impose fines on your company.

Some Final Words
You should protect your construction business from any lawsuits and fines in case of a worker's injury while on the job. That is the reason why you should get the contractor's compensation for small businesses. You may only be a start-up construction firm, but you need to establish a good name for yourself by fulfilling your contractors' need for compensation insurance.

At CSIS Insurance Services, Inc., we put our clients first by offering them policies that they can afford. Having insurance is a necessity nowadays and we're here to help you out. Learn more about our products and services by calling our agency at (888) 501-2747. You can also request a free quote by CLICKING HERE.