Construction Industry

Why is Workers Compensation Insurance so difficult to purchase?

The construction industry in general is very difficult to locate multiple options when quoting workers compensation insurance. A large majority of workers compensation providers do not have an appetite for small construction or high hazard construction businesses. These insurance companies feel the construction industry suffers too frequent and severe claims. Therefore, a lot of construction businesses default to the appropriate state fund or assigned risk pool for workers compensation coverage. The state fund or assigned risk is the most expensive option with the least flexible payment plan. It is simply not the best option. The state fund, also known as the pool or assigned risk, often becomes the only option for small businesses with a high risk and a low amount of revenue. When businesses travel into other states to perform work, there are additional difficulties if they are insured through a state workers compensation fund. In most cases this creates a gap in coverage when the employees are working out of state. Several state workers compensation funds do not extend coverage outside of that state. It’s best for business owners to contact their agent or the insurance provider to verify if coverage extends to the job site that is outside of the state boundaries.

Factors that cause difficulty for the construction industry to find workers compensation insurance quotes:

General Construction Services – not specializing in 1 or 2 specific trades. When a business does the same trade everyday the chances of a workers compensation claim is less likely. Construction businesses that perform multiple trades are more difficult to find multiple workers compensation solutions for.

Heights – historically workers compensation claims pay out considerably more when an employee falls from a height above 15 feet. Most workers compensation insurance carriers limit heights to 15 feet. Any heights slightly above 15 feet must show proper safety precautions taken. Business owners that require proper safety equipment to be attached and written procedures in-place for the underwriter to review generally are given more competitive options. It’s important for your insurance agent to give the proper information to the insurance company underwriter so they have a clear and comfortable picture. Most insurance agents do not take the time to gather the right information therefore the underwriter doesn’t feel comfortable and declines to offer coverage.

Unstable Industry – when the U.S. economy fell in mid-2000’s, the construction industry suffered the most. Workers Compensation insurance carriers who insure construction businesses suffered claims combined with reduced premiums paid by employers due to fewer employees. Insurance companies must be able to somewhat predict the amount of money they are collecting for each risk they insure. Businesses that produce a consistent payroll are easier to predict, businesses that process payroll randomly throughout the year are not, therefore less likely to have multiple insurance companies willing to quote.

Sub-contractors or 1099’s – construction businesses commonly use 1099 or sub-contract labor. Businesses do not specialize in some construction services that are connected to a job therefore must sub-contract to another business that does specialize in that service. The use of 1099 sub-contractors in this way is acceptable by most insurance providers as long as the business owner is collecting a workers compensation certificate of insurance from the sub-contractor. Businesses that choose to pay their labor by 1099 instead of w-4 are viewed negatively by workers compensation providers. Most workers compensation providers have a very limited appetite for businesses that use a significant amount of 1099 labor. If a sub-contractor fails to pay their workers compensation premiums and the General Contractor is not aware their policy cancelled, most likely the General Contractor’s workers compensation policy will be required to cover the claim. Therefore, Workers Compensation providers do NOT like a large sub-contractor or 1099 exposure even if certificates of insurance are collected.

How to properly prepare for a Pay as You Go Workers Compensation Audit

Pay as you Go Workers Compensation Audit

Get the best information about a Pay as You Go Workers Compensation Audit at MyInsuranceQuestion.com

Workers Compensation Insurance policies require an annual payroll audit to be completed. The purpose of the audit is to verify payrolls for the policy period, confirm operations (class codes) and to check for 1099 sub-contract labor. 1099 sub-contract labor can be added to your audit if they are uninsured. In order to exclude a 1099 from your workers compensation audit, they must meet the standards for an independent contractor and must provide a valid workers compensation certificate or state approved exemption. The workers compensation auditor will typically contact you by mail or phone to set-up a time to gather the necessary payroll related documents. There is typically a small period of time to complete the audit otherwise it’s submitted as non-productive. When the audit is non-productive the insurance company produces an “estimated audit” that increases payrolls over the original estimate and a notice of cancellation. The business owner then has to “reopen” the audit and complete within the time frame determined by the cancellation date. If the audit remains non-productive and the policy cancels, the insurance company then reports to the workers compensation bureau. Due to the unproductive audit the workers compensation bureau can prevent coverage from being purchased for that business until the audit is completed.

Typical payroll documents that are provided to the auditor includes the 941’s or Quarterly Tax Reports for the nearest 4 quarters of your policy period. Most policy periods do not work perfectly with the start of a new quarter, therefore, auditors collect the closest quarterly tax reports and commonly use a Payroll Summary for the exact time period to verify payrolls. Most auditors are not familiar with the Pay as you Go model, therefore they audit using the traditional method only, using the Quarterly Tax Reports. The use of the payroll summary for the exact time period is VERY IMPORTANT for the Pay as you Go billing option. Since the business owner is paying premiums based on actual payrolls it’s important to provide the payroll summary for the exact time period. It’s important for the business owner to communicate the need to use the payroll summary for the exact time period at time of audit. After the audit is completed the insurance company will generate a document that shows the payrolls used to complete the audit. If those payroll figures do not match to your payroll summary report either contact your agent for assistance to dispute OR the insurance company. Explain that your billing is Pay as you Go and the auditor’s results do not match your payroll summary.

In addition to payrolls, the auditor is confirming the employees classification is correct. For most businesses all employees belong in 1 of 3 classification codes. Each industry has a workers compensation code that is assigned. Some employees belong to a classification code that is not included in the main code OR their hazard is minimal, therefore classified separately. If an employee is performing job duties that belong in multiple workers compensation codes, typically those wages are either classified to the highest rated exposure or divided between multiple exposures. In order to separate payrolls, the business owner has to provide the auditor with verification of the hours worked in each code per employee. The two best methods for accomplishing this is a payroll system that documents the job description and the hours worked for each employee. Otherwise the business owner will need to use a Log Book to document the jobs and hours worked for each employee to properly separate. The clerical workers compensation code is one of the few codes that cannot be separated with another job duty. Clerical is 100% or nothing.

6 Questions to consider when purchasing Commercial Insurance.

What is the difference between Workers’ Compensation and Employers Liability Insurance when it comes to a commercial insurance policy?

First and foremost, Workers Comp is the one commercial insurance policy that is required by law in most states. Workers comp covers injuries that happen to your employees that occur as a part of the normal business operations. It pays for medical costs and some lost wages. Typically, 60 percent of the wages are paid depending on the particular plan. Employers liability is a part within a work comp plan that that deals with most types of liability that are not associated with lost wages or medical costs. Most commonly this is the cost of a lawsuit. If you have an employee who is hurt on the job and they sue on top of their workers’ comp coverage for damage caused by you or your business these costs can be covered by an employer’s liability portion of a workers’ compensation insurance policy.

What is one type of insurance that many business owners turn down that they frequently regret when claims occur?

Business loss of income coverage is one that many fail to see the value of unfortunately until it is too late. The most basic example of the need for this coverage is when a fire occurs. The general liability or commercial property policy will cover the cost to rebuild your premise, but they will not pay for lost revenue and employee wages while your business is closed to rebuild. If a business cannot withstand several weeks or a few months without revenue this frequently is when they are forced to close altogether. Fortunately, this coverage is usually a part of a business owners package. When businesses by the package they usually are fully insured for these types of losses.

How does a well-documented safety program effect what I pay for a commercial insurance policy?

The main way safety programs can help is when you are asking for credits or discounts and when you are challenging your experience modifier after a claim. If you have had a claim and you have a well-documented safety program in place your agent can use this as evidence that the occurrence was an outlier and not a sign of more incidents to come.

How does my businesses claims history effect what I pay for Workers’ Compensation Insurance?

Your claims history is part of the formula insurance carriers use to come up with your experience modification rating. This rating determines how much of a risk your business is to insure and it is the main factor carriers take in to account when they are deciding to insure your business or not, as well as how much to charge your business in premium. This and the businesses workers comp codes are the main controllable factors insurance carriers use to determine premium rates.

When should I consider going with Pay as You Go Workers’ Compensation?

Seasonal or cash flow strapped companies benefit best from a Pay as You Go Program. This program allows you to pay a small portion of the premium up front and then the rest is due in monthly installments based on your monthly payroll. It helps to free up cash on the front end of the policy period and it prevents excessive audits on the back end of the policy period.

Where can I go to get help when a claim occurs on my businesses commercial insurance policy?

Actually your carrier is the best person to contact with a claim, but it is always a good idea to keep your agent in the loop as well. Your carrier is set up to handle and process the claim. Ask them for help with a return to work program if you do not already have one in place. Studies show the sooner the worker gets back to work in any capacity the more likely they are to return to work and the claim does not get out of control. Keeping your agent in the loop is great as well because they can go to bat for you in the event the carrier is not satisfying you or your employees needs during the claims process.

Workers Comp Opt-Out Programs

In recent years, a small number of states have considered implementing an opt-out option for workers’ compensation insurance for certain employers. Workers’ comp insurance is compulsory in every state except Texas (some states have exceptions for employers with just a few employees). Essentially, opt-out programs allow generally large employers to provide an alternative form of work comp benefits from the statutory defined benefits enacted in a given state. Oklahoma enacted their current workers comp opt-out law in 2013. There is at least some consideration in Tennessee and South Carolina to adopt similar programs (however, these alternative plans are currently on hold in both Tennessee and South Carolina due to concerns raised in other states such as Oklahoma).

Stay up to date on the South Carolina Workers Compensation System at myinsurancequestion.com

As recently reported in the below story, the Oklahoma Workers’ Compensation Commission ruled part of Oklahoma’s current law to be unconstitutional:

There will likely be a final determination of this ruling by the Oklahoma Supreme Court.

Workers’ comp insurance is designed to be an ‘exclusive remedy’ for employees injured on the job. This is generally the case when employers’ carry workers comp insurance (where as employers without workers’ comp insurance bear the risk of being financially responsible to employees injured at work). This system is designed to control costs for employers with respect to workplace injuries, whereas without statutorily defined benefits, employers would be routinely subject to litigation related to on the job injuries.

Most opt-out programs are conditioned on the premise that workers injured on the job will receive equal or better benefits under the alternative program as they would if their employer participated in the traditional workers’ comp system in a given state. In Oklahoma, there is criticism that the definition of workplace injury is varied by companies that decide the workers comp opt-out option from the traditional workers’ comp system. For example, the article above indicates the Dillard’s department store’s alternative benefits plan considers injuries arising from exposure to asbestos on the job as a non-covered injury. On the other hand, statutory worker’s comp laws cover injuries arising from workplace asbestos exposure.

At a minimum, the Oklahoma Workers Compensation Commission’s decision highlights a legitimate concern with respect to opt-out programs. In other words, it seems reasonable to assume that certain employers might at least attempt to provide less benefit than statutorily defined benefits if allowed and they could get away with it.

It will be interesting to see how this trend develops nationally. It is important that injured employees maintain the right to have adequate and efficiently provided benefits. It remains to be seen whether alternative programs can accomplish that or not. Self-insurance has clearly worked in certain situations, so it’s possible the system can still work or even improve with less regulation. However, if not done correctly, there is also substantial opportunity for alternative programs to be manipulated by large employers with substantial negotiating leverage.

Construction Contracting risks for Workers Comp Quotes

Are Construction Contracting Risks hard to quote or impossible?

Working with artisan contractors for commercial insurance can be an exciting struggle. The benefit of working with companies that build or fix our homes and businesses every day is a rewarding challenge. That challenge can be tough to explain. Especially to someone who is just wanting to get their business quoted and move on with their day or with some one who has never experienced a claim. Below are some key things to consider when helping business owners search for commercial insurance.

FInd out just how difficult it is to get Workers Compensation Coverage for some contractors.

Why is contracting so hard to quote?

Contracting companies or Construction firms that perform building work represent some of the highest risk industries. They represent such a high risk because of the nature of work that is being performed. This means the potential for a claim to take place is high and the potential severity of that claim is also extremely high. Meaning the possibility of the claim taking place is high and when the claim happens there is a good chance it would be a severe and expensive claim.

What are the types of things that will cause a claim?

Construction and contracting see a variety of claims causes that make it a little scary for an insurance company. They are unique in that they have the ability to see virtually all types of claims you would see. Slip and falls, lifting strains, repetitive motion claims are ones any basic shop operation could have. Contractors also perform work outside of their shop, so motor vehicle accidents become a concern. Falls form heights can be one of the biggest concerns that can make a huge difference for most contractors wanting to get out of the state fund and with a competitive market carrier.

How can I set my firm apart from the rest?

As an Insurance Agent that specializes in hard to write workers comp, my approach when tasked with quoting a difficult scenario is to focus on the primary concern and risk. As a business owner, the first thing you want to look at is the biggest risk you have to your company which in turn will be the biggest risk to your workers comp carrier. The three biggest concerns being falls from heights, motor vehicle accidents and lifting exposures. This means any way you can limit the exposure or minimize the impact of these the better chance you have of getting quoted. Below are areas that you can look at:

As for height exposures: What is the maximum height in feet you work off ground level? The lower the number the better, but if you are doing work above ground level it is important that you know what the level is. Having a hard cut off point is important. Most importantly, how much opportunity do you have for work higher off the ground. If most of your productive work is less than 10 feet off the ground, but one small job a year is 25 or 30 feet off the ground, You may need to ask the business owner if it is worth paying more for insurance just to work this one job per year? Besides limiting operations, the business owner needs to comply with OSHA tie off requirements and they need to have strict protocols regarding work performed off ground level in their written safety program.

As for Motor vehicle accidents: Are you doing most of your construction work local or long distance? If working outside your local area, do you have multiple locations or crews based in different areas? This can sometimes be a way to limit having employees travel farther and limit your exposure. Besides limiting the travel area, check Motor Vehicle Records on all employees who will drive at time of hire and at least once per year. This is standard for most companies and your Commercial Auto Carrier is likely going to do this anyway. Reviewing and removing higher risk drivers from your driver list can help you with workers comp. Of course, it will save you money on your commercial auto policy ass well if you have one.

Lifting exposures: Generally, are your employees lifting over 50lbs on their own? If so, find a different alternative to lifting like a dolly or something to assist in the lift. That can also be a mechanical hoist or a 2 wheeler to move heavy items. It could also be requiring team lifting for objects over a certain weight. All of these strategies can limit this risk for your business. Safety programs are crucial to have in place for businesses dealing with heavy lifting. Accidents are eventually going to happen and when they do, a well-documented safety program can be the difference in being dropped for your carrier or not.

Working to improve these areas can help with many things for your construction business. Employees will see that you care for their well being, which in itself can be helpful in the quoting process. The safety protocols will help reduce your employees risk of a workplace injury and in most cases this can help the business get better, more aggressive quotes for workers comp insurance. I have seen in many states this savings can be over 50% for a carrier who has to go to the state fund vs the competitive market quotes. That’s like getting a half-off coupon for your workers comp.

Why does my class code matter?

Workers Compensation Insurance is required by law in 48 out of 50 states. It is offered based on a classification code system developed by the National Council for Compensation Insurance. There are more than 700 industry specific classification codes. Some industries have just one, some have many. For this reason, it is very important for business owners to take a few extra moments and speak with their insurance agent when buying or renewing their commercial insurance policy. It is crucial for a business owner to talk to their agent about the daily operations of their business. The key to getting the best policy on the best insurance package is to speak open and honestly with your insurance agent.

Remember that your insurance agent is on your side. They are there to help you get the fullest coverage at the best price possible. Your agent can only do this if you give them all the information possible to negotiate on your behalf with the insurance carriers. This is where having an agency that has the ability to quote your policy with many carriers is important. Some agencies only carry policies with a few select carriers. If your business is in a difficult to quote classification code than this can make it difficult to get a better price or get any coverage altogether. So having a relationship with an agency that can quote from a variety of carriers is important.

Next it is also important to ensure your agent and your carrier are aware of all the operations your business does and does not partake in. This can cause you to overpay or underpay on premium. Regardless of the amount of risk your business takes, it is very important to be classified correctly in the proper NCCI classification code. There is an audit of your business done at the end of every term. Usually if your business is coded incorrectly it gets caught during the audit. If you are actually supposed to be in a riskier code than you will end up owing more in premium. If you should be in a less risky code it can result in a refund, but you have been paying more in premium throughout the year. Typically, that is cash flow you could be using for other more urgent business needs.

A few industries that give us some perfect examples of industries that have classification codes that could be incorrectly coded are landscaping and commercial vs. residential cleaning companies. For example, landscaping has two class codes 9102 and 0042. 9102 is for businesses that only maintain existing lawns. 0042 is for businesses that install lawns, plants and other beds. 0042 is more dangerous. Because it is a riskier classification code the premium for these types of businesses is higher.

commercial and residential cleaning companies include the classification codes 9102 and 0042.

Another example of an industry that has multiple classification codes is the cleaning industry. Commercial cleaning is classification code 9014 and is the less risky class code. Residential cleaning service companies are class code 0917 and they cost more. The reason for a larger risk in the residential industry is because of the fact the employees are driving to one or more off site locations. Commercial cleaning companies typically have employees come to one location, like a mall, and clean one or more business at that one location. For residential cleaning companies, they are liable for any injuries that occur while the employee is driving to and from the different locations. These types of injuries may not be frequent, but when they do happen they tend to be much more expensive than a simple slip and fall while cleaning a building.

So the most important things any business owner can do to ensure they are classified correctly is to speak open and honestly with their agent about the what their business does and does not partake in. Again, this can prevent both over and under paying on premium. Regardless of whether you are in a a fairly risky class code like landscaping or you have a bunch of employees who sit around an office all year, it is imperative to have your business classified correctly. This can prevent your business from over paying throughout the year or from having a surprise when you are audited at the end of your term.

What are Workers Compensation Credits and Debits?

When purchasing Worker’s Compensation Insurance there are two factors that can change your rate, credits and debits. There are credits, which help lower the price you pay, and then there are debits, which bring up the price you pay. There are a few things you need to understand in order to read a quote and declarations page with a little more confidence. This can help you as a business owner more confidently shop for workers’ comp coverage.

DEBITS

There are a few different reasons that you will find a credit and debit on your account. When a debit appears on your statement, the first has to do with whether or not the insurance carrier actually likes the aspect of the business they are writing. In other words, there are policies that carry greater risks for the insurance company. For example, carriers find it safer to cover a clerical worker than a HVAC contractor. One of the ways that a carrier will become more comfortable offering a quote is to add a debit, thus increasing the amount you pay to potential offset losses from injury.

Credits and Debits are an essential part of your workers compensation insurance policy. The biggest reason you will see a debit added is due to your businesses claims history. Some companies are better at managing injury and promoting safety. For example, companies with safety programs, return to work programs, and prompt reporting of claims generally have less claims than a company that never focuses on how to keep a safe environment for workers. Having these programs in place can help you obtain credits, which we will discuss shortly. Simply put the more claims you have the more you are going to pay in work comp premium.

Finally, another reason for debits has to do with the industry itself or the carrier that is on your policy. If the carrier is hurting from having to pay out a lot of claims all at once they may try to make up for the increased cost by assigning debits to certain classes of business. The other factor is the insurance industry itself. Depending how long you have been in business you may have been through the cycle of premiums going up and down. Multiple carriers and the amount of claims drive this across the entire workers’ compensation landscape. This is common in a state like Florida after a hurricane hits or in the northeast after a year in which there was a lot of damage from winter storms.

CREDITS

Credits are a discount off your policy. An example might be a 15% credit on a $1000 policy would take the annual premium down to $850. Most carriers can offer up to a 40% discount to qualified policyholders. The key to making sure that your business gets all of the credits it is entitled to is by making sure you have a strong safety program and a clean history of losses.

There are automatic discounts that you can see due to premium size as well. These are called premium credits or discounts. This is generally set up in a tier system, such as $0-$5,000 or $5,000-$10,000 etc.

The best way to get credits is to provide as a detailed description as possible about what your business does, but also give detailed examples of your safety programs. Showing how you go about keeping a safe and injury free work environment can go a long way to help you secure the largest credit for your business.

I hope this helps you understand just a little bit more about the declarations page when you are trying to determine the exact breakdown of your premium. It’s not always about rates

Workers’ Compensation Insurance Limits

Workers’ Compensation Insurance comes in two parts, coverage A and coverage B. Coverage B is technically called Employers’ Liability Insurance, but the 2 types of insurance are often generically referred to as workers comp insurance in common usage. With respect to employees injured on the job, coverage A (Work Comp) provides unlimited coverage of all medical expenses, a set percentage of lost wages (which varies by state), a lump sum for disabling injuries as well as a disfigurement and death benefit. Business owners often confuse the coverage that part B limits. This effects workers comp benefits, but workers comp benefits are established by the individual state’s statutes. They generally cover all medical expenses when they are implicated. The limits on a policy only relate to employers’ liability claims.

Thus, it is important to know when employers’ liability limits could come into play. As written about in a previous blog entry, the most common types of employers’ liability claims are as follows:

(1) Third party claims: these claims are generally brought about by an injured employee against a manufacturer of the object causing the employee’s injury. The manufacturer then brings a claim against the employer for contributory negligence.

(2) Dual capacity claims: This is similar to the above, but it comes up when the employer is also a manufacturer. If an employee is injured by a defective product manufactured by his or her employer, he or she might bring a product liability claim against the employer in addition to claiming workers’ compensation benefits.

(3) Loss of consortium or other services to family members: loss of consortium and other claims such as modifications to homes or lost parental services resulting from a workplace injury can be covered.

(4) Consequential bodily injury: claims by the spouse or other family members of an injured employee arising from the injury such as a heart attack due to the stress of the news of the employee injury.

(5) Intentional acts/torts by the employer: claims covered in some jurisdictions such as knowingly allowing employees to work in unsafe workplace conditions.

Employers’ liability claims are rare. However, they can occur and are often costly when they occur. Employers’ liability coverage can cover damages/judgments, settlements, legal defense fees and other court costs. Increased employers’ liability limits generally only increase the cost of the workers’ compensation insurance policy by around 1%. Statutory minimum limits are usually (in all but a couple states) $100,000 bodily injury by accident (each accident), $500,000 bodily injury by disease (policy limit), and $100,000 bodily injury by disease (per each employee). These limits can also be increased to $500,000/$500,000/$500,000 or $1,000,000/$1,000,000/$1,000,000 in almost all cases as well as $2,000,000/$2,000,000/$2,000,000 is sometimes available.

Now that we have created a better understanding of why increased limits could come into play, what are the most common reasons for a business owner to need increased employers’ liability limits? The most common reason to get increased limits is probably that they are required by a contract important to a business owner. This is a common request, and it is the most common reason our agency sees for increased limits. However, there are several other good reasons to use higher than statutory minimum limits. To include a workers’ comp and employers’ liability policy under most umbrella policies, the limits generally need to be at least $500,000/$500,000/$500,000 and sometimes as high $1,000,000/$1,000,000/$1,000,000 limits. Another good reason to have increased limits is for businesses which are in industries that are more likely to have an employers’ liability claim arise. Such industries are generally higher risk industries which are more likely to experience devastating claims or manufacturing industries. Devastating claims are more likely to lead to loss of consortium or other services by family members type claims. Additionally, manufacturers are most likely to risk claims from disease exposures or dual capacity products liability type claims from employees. This should provide an understanding of when it is worthwhile to consider purchasing a slightly more expensive workers comp policy.

What is the Assigned Risk Provider?

The assigned risk provider is also frequently referred to as The State Fund or The Pool

Workers’ Compensation Insurance Coverage is required by law in nearly every state in the country. The basic purpose of the Workers’ Compensation Insurance is to provide wage replacement benefits and medical treatment for employees who have been injured on the job. Workers Comp prevents the employer from bearing the costs of injuries that occur during normal business operations.

Each state has their own method for how they go about determining rates on workers’ compensation class codes. Most states partner with the National Council on Compensation Insurance (NCCI) to determine rates for different class codes. Some states; like Indiana for example, have their own rating system administered by a government organization. Most use the basic guidelines of the NCCI system.

Every state also has a different way for how they go about setting up a provider of last resort for the employer’s of the state. This provider of last resort is also referred to as the assigned risk provider, the state fund or sometimes as the pool. This provider is designated as the provider of last resort for businesses who cannot find coverage through the open market. It is typically more expensive from this provider for a number of reasons.

Businesses that end up having to purchase coverage from the assigned risk provider, may not be able to find insurance coverage for a number of reasons. Lots of times it is because the business operates in a classification code that carries more risk than most carriers are willing to take. Sometimes it is because that business has had too many claims within a short period time. It also is frequently because the business just does not generate enough income for the amount of risk in their industry. States usually have a requirement that the business has to try to obtain coverage from a certain number of providers on the open market before they can apply to the assigned risk provider. Usually that number is two or three providers.

There are three main ways states go about providing employers with an assigned risk provider. Some states provide their own fund, some use NCCI and some have a partner carrier who guarantees coverage for employers who cannot find coverage on the open market. Typically states who have a strong assigned risk provider who competes with the open market enjoy the best rates on workers’ compensation insurance. There are different ways to provide this strong provider, but typically the stronger this provider is the lower the rates employers pay.

Utah is an example of a state who has its own fund. This fund is called the Workers’ Compensation Fund. This fund dominates 57 percent of the market and is the main reason Workers Compensation Utah enjoys some of the lowest rates in the country for workers comp coverage. Colorado has a partnership with a company called Pinnacol. Pinnacol was begun around the time workers’ compensation became a requirement in the state. It was designed in partnership with the state government so there would always be someone guaranteeing coverage and competing to keep the rates reasonable for the employer’s of Colorado. Both of these states enjoy some of the lowest rates on Workers’ Compensation Insurance because of their strong Assigned Risk Providers. New York is an example of the other end of the spectrum. New York has its own state fund administered as a non profit agency. New York also has very difficult regulatory compliance regulations for workers comp. These regulations force many carriers to simply not offer coverage in the state. All of these factors combine to cause New York to have some of the highest workers compensation rates in the entire country.

So administering the state fund is left up to each individual state. Again there are three main ways the states go about doing this. Some handle it themselves, others partner with an outside carrier and some contract this service out to NCCI. All three ways can be effective ways to keep costs down for the employers of that state. The strength of these pools goes a long way towards determining what employers across the state pay for workers compensation coverage.

What is Artisan Contractors Insurance?

Inside the insurance industry Artisan Contractors Insurance is commonly referred to as insurance for Artisan Contractors. What is an Artisan Contractor? That is a question many new business owners ask when applying for insurance the first time. These business owners frequently find out this is what classification their business is in. Artisan Contractors are a wide range of businesses that operate in different parts of the construction industry. Electricians, Plumbers and Painters are all included in this category.

Artisan Contractors Insurance for Electricians

Some common (NCCI) industry classification codes include:

5191 Electricians
5183 Plumbers
5537 HVAC Contractors
5221 Concrete Construction
5474 Painters
5437 Finishing Carpenters

They each have a similar, but different role within the construction industry and each type of work carries unique risks. From an insurers perspective they each carry their own risk and that is why they are separated into several separate class codes. Working with your insurance agent to make sure you are in the proper classification code can go a long way towards removing any headaches down the road relating to your commercial insurance policy.

Below are some common types of insurance recommended for Artisan Contractors Insurance:

General Liability

General Liability (GL) is typically the first line of insurance purchased by a business. GL is required by law in most states; additionally, businesses are often required to purchase coverage with most contracts for leases, loans, and work performed for others. GL exposures are primarily at the contractor’s office or shop and are generally limited due to lack of public access to the premises. Retail sales increase the possibility of customers slipping, falling, or tripping if customers visit office to view products. Job-site exposures include potential injury to the client or damage to the client’s property. Tools, power cords, building materials and scrap material, use of saws and other power or hand tools are all potential risks.

Workers’ Compensation

Workers’ Compensation Insurance is a state mandated insurance coverage required by nearly every state in the country. The basic purpose of Workers’ Compensation Insurance is to assure that injured workers get medical care and compensation for a portion of the income they lose while they are unable to work. Workers receive benefits regardless of who was at fault in the accident. Also, Workers’ Compensation Coverage prevents the employer from bearing the costs of injuries that occur during normal business operations.

Commercial Auto

Automobile exposures are generally limited to transporting workers, equipment and supplies to and from job sites. Hazards depend on the type and use of vehicles and radius of operation with the main hazards being upsets. Vehicles may have special modifications or built-in equipment such as lifts and hoists. If employees utilize their own personal vehicles for work related tasks then Hired and Non-Owned Coverage should be purchased.

Hired and Non-Owned Auto

Hired and non-owned auto insurance is commonly added (or endorsed) onto the commercial auto insurance policy. This endorsement adds additional coverages for the insured in the event there becomes a liability issue for their business for an automobile accident involving a vehicle they don’t directly insure. This coverage will pay for damages to a third party, on behalf of you the insured. This coverage kicks in if the business is held liable for an accident or injury caused by a vehicle they hired or a vehicle someone uses while performing work for a business. If you send an employee to run and errand on behalf of the business, your business is responsible for damages that occur.

Property Insurance

Commercial property insurance for business owners covers many types of losses and damages to a companies property. Property exposures are generally limited to those of an office, shop, and storage of materials, equipment, and vehicles. Property insurance typically provides coverage for events like fire, smoke, wind, hail and vandalism. Policies often have included or excluded coverages. Some natural disasters like earthquake or hail, may have separate deductibles.

Inland Marine

Inland marine exposures include contractors’ tools and equipment, including ladders and scaffolding, hoists, and portable welders, the transport of materials, and installation floater. Goods in transit consists of tools and equipment as well as products purchased by the customer for installation at the job site.