Insurance question

[KentuckySawyer]

I am looking at having to get a Workman's Comp policy for my business. I got a quote today that kind of took my breath away.

I guess my question is, how much insurance do I need. I'm an incorporated one man show using subcontractors (or at least guys who get a 1099) and hiring cranes and wood haulers as needed. I have personal health, life, and disability policies, a good liability policy for my business, and of course the trucks are insured.

So do I need a WC policy? Legally and ethically?

 

[Lumberjack]

Yes, I am in the process of getting WC right now. Shouldnt be too bad price wise, plus it makes alot of sense to protect yourself. Not too many simple injuries in this profession.

 

[Trignog]

I would say yes. You'll retain your help. I had been working under the table for a long time and it has scared the crap out of me.Could not beat the commute and pay, 1 mile 20$ an hr. About a year in I bought my own liab policy (1,300$) for MY OWN SIDE JOBS, and I could poteniall break 1 million dollars worth of stuff now! cool huh But really when I bought it my boss said he was relieved and told customers I was a sub contractor, I am not. I just kept my mouth shut, my point is if I got hurt with him I would be screwed and everyone WILL get sued. I don't know the legalities of it all but thats were the lawyers come in. To be safe pay wc, gound men are cheap, most just want a check not a carere, round here owners are payin bout 42% for wc. As for me I am finally getting a real job real soon I hope!

 

[Newfie]

You already have health(pays to fix you),life(pays your family if you kill yourself working) and disability (pays you if you get hurt and can't work anymore).

You have no employees, just 1099'ed subs. I might be missing something but WC seems redundant. You can't collect twice.

Maybe I'm missing something.

 

[fpyontek]

KentuckySawyer,
You need Workman's Comp. Talk to an accountant about the best way to pay yourself to reduce your WC liability. If you're married you could pay your wife the bulk of the income as office help. There are other ways to reduce your WC bill. You also need WC for subs. The WC audit at the end of the policy will ask for certificates of insurance from you subs. If they dont carry WC you pay for their gross. Anyone sub can say they have WC. It's not worth the chance I think WC is more important than Liability Ins. For example, say you totally destroyed a house $200K max? Personal injury could easily be much more. Also to be a member of some organizations also require WC.


Fred

 

[begleytree]

Check into groups, usually your local chamber of commerce will have a reduced rate for the group that you can get also if you are a member. It's cheaper to be a member than to pay the full price of W/C. Other organizations will approach you also to join their group, it lowers everyone's rate. If you have a claim, they'll probably drop your co from the group when and if they can.
Also look into different job classification codes. Say your guys finish a tree job at 5 hours, and move/wash/service equipment for the other 3 hours in that day. It takes a little time to class those hours as driver, or general labor, but it is well worth the money saved. Just keep good records, and it'll be easier. If you're not actually on site, class yourself as admin, sales, retail, what you are really doing. Blindly classing everyone as tree care is easy as far as paperwork, but expensive.
Everytime I've spoken to a W/C employee, they tell me this, and help with codes. A cheat sheet kept in the wc file with the codes streamlines the process.
-Ralph

 

[Nickrosis]

Is everybody thinking tonight? Is Newfie the only one who read the post?

If you're a one-man show, you shouldn't even look at WC, and the people selling it to you should be shamed. Get WC when you have employees to insure! It's not for subcontractors! That's considered fraud...

You should carry long and short term disability and health insurance per your needs. If you do grow and hire employees, definitely get WC but consider exempting yourself to save money. If you get hurt, your expenses will be paid either way (your personal insurance or your company's WC), but it's nice to have it off the company's record so that your modifier is kept lower to save money.

Instant message me if you have any questions, I've spent a lot of time with the subject.

 

[Lumberjack]

Legally if someone gets hurt (one of the 1099 groundies, if thats what they are) then it might be hard to prove in court that they are truly sub contractors and not just employees.

I was gonna use the 1099 approach, but after talking to the accountant and lawyer it would be hard to prove that they werent employees opening me to liability.

 

[begleytree]

Nickrosis, Perhaps your state has different laws. I know that in Ohio, you used to have to have 4 employees before you were req'd to have W/C. Now the law states that if you have one employee, counting/ including yourself, you must have it. Can't figure out why they worded it like that. Coulda said all biz's in Ohio must carry W/C regardless of employee count. Same thing.
-Ralph

 

[Nickrosis]

It should be no problem. If there is a problem, then it's not a matter of insurance. It's a matter of employment classification.

Classifying people as either subcontractors or employees is not that difficult, and when in doubt, make them employees. It's important that you read this: http://www.irs.gov/businesses/small/article/0,,id=99921,00.html

 

[fpyontek]

Is everybody thinking tonight? Is Newfie the only one who read the post?

...It's not for subcontractors! That's considered fraud...

fraud or not if someone working for the sub gets hurt and there is a lapse in the sub's WC or he does not carry WC, he WILL be sued.
I question your experience on insurance matters to give such flippant advice.

Fred

 

[Nickrosis]

fraud or not if someone working for the sub gets hurt and there is a lapse in the sub's WC or he does not carry WC, he WILL be sued.
I question your experience on insurance matters to give such flippant advice.

Fred

I love it!

 

[Lumberjack]

Do your 1099'ers work for other companies? Do they have a set contract before a job starts?

Do they carry their own liability insurance?

Whos fault is it if they are roping down a limb on your wood, they let it run too much and it destroys a roof? If they are subcontractors whos fault is it? If its yours will your insurance pay for it with a diff sub contractor involved? If its theirs can they cover it?

Too many loopholes to get your books torn apart and everyone up a creek methinks.

 

[Nickrosis]

Nickrosis, Perhaps your state has different laws. I know that in Ohio, you used to have to have 4 employees before you were req'd to have W/C. Now the law states that if you have one employee, counting/ including yourself, you must have it. Can't figure out why they worded it like that. Coulda said all biz's in Ohio must carry W/C regardless of employee count. Same thing.
-Ralph

I'm sure we have different laws. Your statutes are really confusing....I'm so used to the WI site that it doesn't phase me, but I can't get through yours!

Just based on what you've said, I would assume it was phrased that way for a reason so that one-man operations would be exempted from the requirement.

 

[Nickrosis]

Do your 1099'ers work for other companies?

Yes

Do they have a set contract before a job starts?

Always verbal. Usually written. Depends on the nature of the job and whether the subcontractor sold the job or we did.

Do they carry their own liability insurance?

YES!

Whos fault is it if they are roping down a limb on your wood, they let it run too much and it destroys a roof? If they are subcontractors whos fault is it? If its yours will your insurance pay for it with a diff sub contractor involved? If its theirs can they cover it?

Depends on culpability. If they're to blame, they take it to their insurer. If all else fails, it falls on our insurance. But property is different that injury...

I would stick with subs with whom you feel confident. It's all job-dependent....who sold it, etc. We've got the equipment, the subs bring the manpower. Some days, half the company or more is subcontracted.

 

[Lumberjack]

Not yours nick silly! The author of this thread!

 

[Nickrosis]

Calling me silly? How was I supposed to know! Free info for you (but you can't reprint it without my permission!).

 

[Lumberjack]

How would you determine the liability of a contracted groundy not holding the limb? Assuming the rope didnt fail but he was using your friction device or your wraps in the tree?

Seems like alot of deep thinking by pencil necks (the insurance companies)

 

[Lumberjack]

Calling me silly? How was I supposed to know! Free info for you (but you can't reprint it without my permission!).

I just printed it out a million times, sue me

 

[Nickrosis]

How would you determine the liability of a contracted groundy not holding the limb? Assuming the rope didnt fail but he was using your friction device or your wraps in the tree?

Cross that bridge when you come to it. But in the meantime, load up on liability insurance just in case and screen the people working with you.

Any kind of gray area is going to get negotiated, and if you have a good set of processes and written documentation, you're in a far better place.