New York Business owners
Business owners in the state of New York, especially in the construction industry, have been trying to figure out and understand when and who needs Worker’s Compensation Insurance for many years.
Many business owners believe that if they are a sole proprietor, partnership, or a 1 or 2 person corporation with no employees that they do not need to carry workers’ compensation insurance.
Now, this is 100% true as long as that business owner continues to work for themselves and not act as a subcontractor for another business entity.
New York State Worker’s Compensation law
The New York State Worker’s Compensation law section 56 provides that a general contractor or its insurance carrier is liable for payments of compensation to an injured employee of an uninsured subcontractor.
Should the uninsured subcontractor get inquired while performing work for you, they would be eligible to file a claim under your worker’s compensation policy.
As a result of the increased exposure and potential claims, your insurance company will charge you a premium for the uninsured subcontractor based on the total labor incurred.
Tips on how to protect your business from large audits
Any business owners who have gone through their insurance audits know what a pain it can be.
If you hire subcontractors you must stay on top of your collecting certificates of insurance.
A certificate of insurance (COI) is issued by an insurance company or agent and will verify the business coverage and summarizes the conditions of the policy.
Information on a certificate includes policyholder’s name, the insurance company, effective dates, policy limits, and other important details.
General contractors are responsible to always make sure they have active certificates on file for any of their subcontractors before they are allowed to do any work for them.
General Contractors should also make sure they are listed as an additional insured on that subcontractor’s policy as well.
Business owners can verify coverage on a certificate by going to the NY Worker’s Compensation Board website and doing an employer search. This gives you a back-up way to see that the policy is still active.
If you do have uninsured subcontractors, make sure you are prepared at audit and have the total cost of labor broken out from material and profit. This way you don’t get overcharged due to unpreparedness.
What should you do next?
Business owner’s in New York have a lot that they need to deal with. Making sure you have the right insurance coverage is hard enough. Making sure your subcontractors do as well is just another responsibility you, unfortunately, have to do to avoid paying for it.
The biggest thing we can suggest is to make sure you understand what you need to do and what you need to look for. Sit down with your insurance agent to get a little more in-depth education on this.
If you don’t have a relationship with an agent or want a review of your insurance then click the button below to schedule a review with one of our trusted insurance advisors.