What’s in Your Roofing Contractor Workers' Compensation Tool Bag?
This follows my roofer general liability post, here can read it by clicking HERE. The post also includes coverage that can be found on a general liability or workers' compensation policy. So even if you're not interested in general liability, it's worth reading the second half for the related employee insurance coverage.
Now, let's cover how to protect your contractor business when an employee gets injured or even worse gets killed on the job.
Workers' Compensation Insurance pays for three things when an employee is injured on the job, medical bills, recovery costs, and partially missed wages. If the employee dies, Work Comp can cover funeral costs and benefits to the worker's family. Just like general liability insurance, some contracts may require you to carry Workers' Comp for your employees or yourself before you get paid. Workers' Compensation was designed to help pay for work injuries and illnesses without the rigmarole of a lawsuit. This insurance will help your roofing or other contracting business do three things:
• Pay for medical expenses and replacement wages when employees are injured performing a work related task.
• Comply with state Workers' Compensation laws.
• Pay for legal expenses if an employee sues over a work injury the policy does not cover.
In most states, it is a requirement for roofing employers to purchase Workers' Compensation Insurance as soon as they hire their first employee. However, even if your state does not require you to carry the coverage, it is wise to have this policy. Workplace injuries can be extremely costly. On average, a work injury claim cost $36,551. If you are not covered with proper insurance, the cost of an injury could come out of your pocket and potentially bankrupt your business.
The rate for Workers' Compensation insurance is calculated on how an employee is classified, based on the type of work they primarily perform (or in some cases, can perform due to proximity and type of business) and is based on their payroll. Although some cases the insurance premiums are viewed as costly, they are not as costly as a death claim or losing out on contracts because you don't have the coverage. Depending on your state, as an owner, you can personally be fined, and/or placed in jail for not having workers' compensation insurance.
In other words, if you're required by the state to have workers' comp, than you better have the coverage. If you're unable to find a workers' compensation policy in the "voluntary market", in other words, insurance carriers are saying no, than the assigned risk, aka workers' comp "pool" might be a good fit. In some states, including Wisconsin, the premium is the same for pool workers' comp polices as they are for non-pool polices.
So, in the case of Wisconsin workers' compensation insurance, an employer will pay the same premium and there isn't a detriment in terms of premium for going into the pool. However, the down payment can be higher, and the ability to earn dividends, are not available.
For Wisconsin roofing contractors, the biggest difference between assigned risk policies and the voluntary market is dividends. Dividends are potential payments that can reduce an employer's final net cost for workers' compensation. The next most significant difference is the down payment.
In other states, including Minnesota, assigned risk workers' compensation insurance polices are almost always more expensive than the voluntary market. For Minnesota roofers wanting workers' compensation, being in the pool means higher premiums and down payments.
One way to mitigate the down payment is through the use of premium financing. We have a workers' compensation premium financing program that will lower an employer's down payment to only 10%, and then the rest of the year is pay-as-you-go workers' comp. This allows employers to keep a lot more money in their bank account and improve their cash-flow.
When combined with our payroll service, almost all employers will experience a lower net cost and greater cash-flow. You can find out more about our payroll service by CLICKING HERE.
You can find out more about our low 10% down pay as you go workers' comp offer by CLICKING HERE.
1 Reason Insurance has several roofing contractor workers' compensation insurance carriers to select from. If you want contractor coverage that will keep you covered as well as you cover your clients, give us a call or fill out our easy form and let's see what the most appropriate coverage for your roofing business is.