Any business with given numbers of employees is supposed to have compensation insurance for the workers. The only exempted businesses are the sole proprietorship where the owner is the single employee. If you have no workers’ compensation coverage, then you risk hefty fines and worst still your business could face a significant financial risk especially if one of your employees gets an injury at work.
Depending on the state, there may be some exceptions depending on the number of employees your business has. However, in most states workers compensation insurance for contractors is a necessity.
Below are some of the risks you possibly face if you engage a contractor who is not covered without workers’ comp insurance.
A homeowner can face charges if the contractor gets an injury at the owner’s premises. This charge is a possibility if the contractor has no workers’ compensation for contractors. The homeowner can also be sued if the insurance does not cover the subcontractors hired by the contractor. In most cases, these contractors work at a cheaper cost because they do not pay their workmans’ compensation premiums.
If you hire such a contractor, then an injury occurs you risk incurring a high price on your homeowners’ insurance policy, meaning you bare the risk cost on the contractors’ behalf and any harm that might occur at your home.
Unnecessary high costs
The bid from uninsured contractors is usually low as compared to insured contractors. This low bid is a risk in disguise! In case the contractor is injured or even dies from an accident at work, you have to cater for all the costs. In such cases, you also risk losing your assets in the lawsuit. Such costs are avoidable by demanding the contractor to prove coverage with compensation insurance.
Due to their low bids, most clients find themselves falling into the snare of engaging uninsured contractors. Many times this happens even without the knowledge of the client, by assuming that the contractor must be insured.
In case the client realizes that the contractor has no insurance cover for themselves at the middle of the task and demands for proof of the workers’ comp for contractors insurance policy, then the contractor will most probably leave the job unfinished. The contractor will weigh the cost of acquiring the insurance policy, and since it is costly, they mostly disappear leaving you receiving bids again.
You are unprotected
If you hire contractors who are uninsured, knowingly or ignorantly, you are likely to suffer the same consequences. It is the homeowners’ responsibility to inquire whether the contracted company has fulfilled all the compensation policy requirements. In case you choose to proceed with a contractor who is not insured then you are at risk of taking care of any injury that may occur to the contractor or any hired subcontractor. In short, you are not protected in any way as the homeowner if you engage a contractor who is not insured.
Call to action
Any business operated without compensation insurance is a risky affair. You do not only risk facing hefty fines but also heavy losses. Strong Tie Insurance offers you the best advisory services as well as the best worker’s compensation insurance policy. Contact us today.