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Hearth, Patio and Barbecue businesses have workers compensation exposures that may differ from those of a standard retailer. In store (premises) and field (installation & service work) exposures normally present challenges to insurance carriers. Following are some thoughts to help you better understand and manage your workers compensation insurance.
What is Workers Compensation?
Workers Compensation insurance covers the cost of medical care as well as lost wages for workers injured on the job .It is considered the “exclusive remedy” for on the job injuries suffered by employees. It also cover work related illnesses.
Do I need to Carry Workers Compensation?
Workers Compensation is mandated by the state in which you conduct business. Determine if you are required by your state to provide workers compensation. Some States only require an employer to provide coverage when they employ a certain number of employees. Workers Compensation insurance must be bought as a separate policy. Although In-Home Business and Business Owner’s Polices (BOP’s) are sold as package policies, they do NOT include coverage for worker’s injuries or job related sickness.
How are my premiums determined?
Your premium is calculated as a rate per $100 of remuneration (payroll) times any discounts or credits that may be applied. Because of this, it is important that you project your job classification payrolls as accurately as possible. Your loss history will also determine if any surcharges are to be applied. Be certain that your employees are classified correctly so that your business will be classified into the descriptions that best match the type of work being performed by your employees.
Monitor you payroll!
Keep an eye on your payroll throughout the year. If you find that half way through your policy year your payroll seems to be exceeding your original projections contact your agent and ask them to adjust your payroll exposure. This can help avoid a potentially adverse workers compensation audit at the end of the policy year. Conversely if, for unforeseen reasons, your payroll goes down during a policy year, premium will be reduced.
Beware of the consequences of hiring a sub contractor!
At the end of your workers compensation policy period the insurance company will audit your books. The auditor identifies that some work was performed by a subcontractor and accordingly asks to look at the certificate of insurance the subcontractor provided you. You either can not locate the certificate or the subcontractor is unable to provide the same. Your audit comes out and unfortunately you are required to pay for the sub’s workers comp while he and his crew were on your job. The basic way to head off this problem is to make sure you have current certificates of insurance for any subcontractors used during your workers compensation policy period. If your subcontractor cannot provide a certificate you are entitled to withhold a portion of payment due to him or her that will cover their exposure. Bill Koehler is Executive Vice President of Security Group International, Inc., a provider of insurance and risk management specifically for the hearth and chimney industry.E.mail:
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