I AM A CONTRACTOR AND I WANT TO BE EXCLUDED FROM WORKERS' COMP.

I’ve worked with residential contractors for 30+ years and this is one of the two main rallying cries I’ve heard from contractors when starting their new business venture (the other being they plan to use only insured subs). 

The reasoning is almost always the same – the new startup has heard from a buddy that they can exclude themselves from coverage as a way to save money. And while saving money is always important, it is especially important for contractors who have yet to build their pipeline of projects.

Opening a business can be expensive and the cost of doing business, especially insurance costs, can seem overwhelming. And choosing to exempt yourself as an owner from coverage to save money will almost always sound appealing. 

But is it really?

A few points to consider:

As the owner of the business, what are your duties and responsibilities? If you are a paper contractor and strictly managing and overseeing projects while the labor is performed by subcontractors, then your exposure to injury is considerably limited although not eliminated.  But if you own a framing operation and you are out slinging a hammer day in and day out with your crew, then you are exposed to an inordinate number of hazards on your jobsite – slips, trips and falls, handling materials, heat, back strains and more.  The type of work you perform matters.

Workers’ comp provides coverage for medical expenses related to your work-related injury.  These expenses could include hospitalization, surgeries and rehab among other items. 

Indemnity benefits could provide partial replacement of your income.

Workers’ comp can provide compensation for permanent or long-term disabilities caused by your workplace injury.  These can be significant.

Health insurance may not be available if an injury is deemed to have occurred while working.  Each plan is different, so it is best to review those coverages with your agent.

In the event of a fatal accident on the job, workers’ compensation could provide financial support to your family or dependents, including burial expenses.

I’ve met hundreds of contractors over the years, and many have elected to exclude themselves from coverage under their workers’ comp coverage.  Most have never experienced an injury on the job but sadly, I know several who have, and the consequences of that decision were unbearable. Consider your options.

The construction business can be tough. If you need support or have questions, LCI Workers’ Comp has been a trusted resource for more than 35 years.

This information is provided for information purposes only and should not be relied upon as legal advice. Please contact your attorney if you have specific questions regarding a specific item mentioned in this article.