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workers comp insurance


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Paula's Forum Posts: 60
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By Paula in Fredericksburg, VA on 1/4/2006


First off, I apologize if this has been answered elsewhere on the forums but I have read through a lot of them and while I have seen it discussed, I haven't seen where somebody gave names of companies. 

Okay, I need some help on where I can find worker's compensation insurance. Every insurance agent I have spoken with has informed me that I am not going to find it or if I do, it will be astronomical in cost. So suggestions, please?

My dilemma is that I have found some subs that in my estimation, seem quite good, but they don't carry worker's comp insurance. In the state of VA, if you have two or less employees, you are not required to buy and carry it. The county that I live in (and the counties north of me) has experienced explosive growth over the last five years. Finding subs has been a challenge. So I decided to look for subs in the county west of me that was still pretty rural. I have found about five subs that seemed wonderful. They are all mature men that have been doing their trade for 15+ years. I did reference checks on them attempting to find someone I know who has used them or obtain references from established businesses that have used them. Their references were excellent. Their quotes were extremely good.

Following the advice of The Owner-Builder Book, I am purchasing my own materials (which most subs that I have spoken with wouldn't even consider) and these guys are perfectly okay with it. Furthermore, they are very supportive of my endeavor and will talk with me extensively answering any questions and giving suggestions. 

So unless I am missing something that I have overlooked, I am motivated to find WC insurance. Anyone here purchase WC insurance as an owner-builder w/o a GC license? If so, can you share where you purchased it from and general idea of cost?

Your help is appreciated.


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By Brian in AK on 1/4/2006


Paula,

  I did an owner-build in Alaska. Here worker's comp is required for anyone with employees (I am pretty sure). I asked for the insurance certificate from my larger subs. If you are self employed, e.g. cabinet installer - he is not required to carry worker's comp, so I wanted it to cover me if he got hurt.

  I went to the local State Farm agent, after visiting others first, and they were able to write me a policy. The policy was written and assigned to the state pool. Kind of like the high risk pool that states have for high risk drivers if the state requires insurance. That way you can get insurance regardless, someone has to insure you.

  My policy was initially $550 for a one-year premium. They reevaluate at one year to see how much you really needed to pay. I canceled after four months and after answering questions about what kind of work went on while I was building, I only ended up paying $28. I had no employees, and all my subs that worked for me during the time had insurance. The policy was basically set up like I was a business with no employees.

Brian


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By Kenneth in Lees Summit, MO on 1/5/2006


Brian had an easy answer. Unfortunately for me, it wasn't so easy.

For workers' compensation insurance, it was a function of salary. Also I couldn't get workers' compensation without covering my work first, even though I work for free (it was my own house), I still had to put a market value on my compensation; my workers' comp policy was based on market value. Note than some trades are very high risk (e.g. workers' compensation on a roofer exceeds 100% of salary). Given the complexity of it all combined with the expense, I scrapped the whole idea of workers' compensation insurance. I figure this is also why so many residential roofers don't speak English and are paid cash - if something were to happen who are they gonna call and complain since they risk deportation?

However what I did do was to set up accounts with two local labor pools (Labor Ready, Labor Pros) that provide unskilled and skilled labor. These are big companies, and their employees come equipped with a safety program and workers' compensation insurance. And since they have established safety programs and established history, they also pay considerably less cost for workers' compensation. As part of this agreement, I could send in a person (perhaps say a side job?) with a pre-negotiated hourly rate that they would get paid, the labor shop puts their overhead and workers' compensation rate on top, and voila - I have workers equipped with adequate insurance (and the labor shop makes a couple of bucks/hour, still much cheaper than a separate policy and much easier too as I have no record-keeping requirement).

It is much easier this way, as I don't have to worry about withholding, insurance, etc. This comes with a caveat. For example I couldn't send a roofer through Labor Pros because their workers' compensation didn't allow them to send out roof labor (not a problem for Labor Ready, although it cost me an extra hourly rate to cover the extra risk). This was actually the easiest solution.

This set me up with a labor pool for unskilled labor. Nobody cleans quite as well as these workers. I thought I would save money doing my own site cleanup, but quickly realized these laborers could work circles around me, and at the hourly rate I paid for labor it was silly not to use them. Even though my house is complete, I still have both accounts open and use labor for landscaping, retaining walls (the retaining wall block I used weighs 70+ lbs. each), and other hard labor.

There are other side jobs I hired where I simply didn't worry about it. For example, what is the risk associated with interior paint - a repetitive motion wrist injury? That said, my painter did get injured; thankfully he has excellent health care from another source.


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By James in Greenfield, IN on 1/5/2006


I guess I am a little confused. Don't you have to carry workman's comp insurance on employees? And aren't you really contracting for services with subcontractors? Meaning they work for themselves and you are not in a employer/employee relationship. Maybe the laws are different in different states.

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By Brian in AK on 1/5/2006


  Sorry, did not add that the worker's comp policy that I had did not cover me. That would have been a different policy.
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By Brian in AK on 1/5/2006


James,

  Yes, you are correct and incorrect. In Alaska, this is my understanding of why I needed the insurance.

  A sub who has no employees, other than himself, is not required to carry a worker's comp policy. So what happens if he gets hurt on my job site? This is why I had the policy. 

  Also what if his certificate for worker's comp is not valid? You will not know if you do not check and ask the policy holder to notify you when that the policy has been canceled. Not usually a problem with bigger companies, but sometimes the little guy cuts corners, i.e. shows you a certificate that is no longer valid.

  One of the stipulations of my policy was that I would ask all subs for a copy of their insurance.

Brian


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