Do You Need Workers Comp for Your Construction Business?

05
June 2018
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In the high-risk industry of construction, accidents can – and will – occur. There were 2.9 million workers hurt on the job last year and an average of 14 deaths every day. And more than 21% of those annual fatalities occur in the construction industry.

Workers’ compensation insurance was designed to protect employees in the event of a work-related accident or injury. But not all employers are carrying this essential coverage. If you’re wondering if you really need workers’ comp for your construction business, ask yourself this:

Can you afford the high price of an employee injury?

Perhaps you’re the exception to the rule, but most contractors cannot afford to pay out of pocket for the cost of hospital stays, lost wages, and lawsuits resulting from employee injuries.

And consider this:

Skipping workers’ comp coverage for your employees can also land you in hot water if you aren’t complying with state law.

Does Your State Require Workers’ Comp?

Although the requirements vary state-by-state, most require that employers carry workers’ compensation coverage for their employees.

Some states consider it mandatory if a company has one or more employees, while others may require it for a company with five or more employees. In Texas, workers’ comp is optional, except for the instance when a construction business is contracted by a government entity, at which point it becomes mandatory.

Also, in many states, you are required to provide proof of workers’ comp coverage in order to be legally licensed as a contractor.

For example, in CA you have to provide one of the following to the California State Licensing Board (CSLB) when applying for a contractor license:

  1. A valid Certificate of Workers’ Compensation Insurance
  2. A signed exception, certifying that you currently have zero employees

For some class codes, like roofers, the CA license board requires workers’ compensation insurance whether you have an employee or not.

Can Workplace Accidents Occur?

Ask this of someone with employees in a low-risk industry like, say, computer engineering and they’ll shrug out a “sure, it could happen.” Ask the same of an employer in the high-risk industry of construction and expect to hear a resounding “yes.”

As a contractor, you and your crew are out in the field, regularly working at different locations, with a variety of tools. You operate heavy equipment, climb ladders, work on scaffolding or rooftops, on electrical panels… the list goes on.

Out of 4,693 worker fatalities in private industry in 2016, 21.1% were in construction — that is, one in five worker deaths occurs in the construction industry.

Every year one in ten construction workers is injured. If one of those workers is an employee of yours, will you be able to foot the bill?

Can You Afford to Pay Out of Pocket?

Your long-time employee gets tangled up with a circular saw and injures his hand in the process. He immediately is rushed to the hospital, where medical bills begin mounting up.

According to the Bureau of Labor Statistics, hand injuries are the second-most common work-related injury. And they can also be one of the most costly.

  • Stitches can cost up to $2,000
  • Mending a laceration can cost up to $10,000
  • Repairing a severed tendon can cost up to $10,000

The average hand injury claim now exceeds $6,000. Add in lost time and the average workers’ compensation claim for a hand injury reaches approximately $7,500.

Do you have business assets in place to cover the costs? And if you have to use them to pay for an injured employee, will your business suffer as a result?

Lawsuit fees and settlements aren’t cheap

If you don’t have the proper insurance in place and are unable to cover medical bills and missed pay for an employee injured on the job, you can expect to be hearing from their lawyer. Even if the injured employee is a loyal, long-time friend.

Not only would he have every right to sue your business for reimbursement, he likely won’t have a choice.

Chances are that you will be found at fault and have to pay not only lawyer fees, judgments, and settlements but will also be fined for lacking state-mandated workers’ comp coverage.

What Workers’ Comp Does for Your Construction Business

Should the unexpected occur, workers’ comp coverage will be there to care for your injured employee, helping to cover the cost of medical bills and lost wages.

Shielding them from the high costs of medical treatment, workers’ comp will ensure that your faithful employees receive the necessary medical treatment they need and recover as quickly as possible.

Returning to the above example, your long-time employee gets badly hurt on the job. Instead of having to worry about where his income will come from, how he’ll cover medical bills, and having to make the choice to take legal action, he’ll be able to spend his time resting and recovering from the injury he sustained on your job site.

Workers’ comp will help pay for:

  • Medical expenses
  • Disability expenses
  • Wages lost during recovery
  • Funeral expenses in the event of a fatality

Workers’ comp protects your hard-won assets and gives you peace of mind knowing that – should an employee be injured on the job – your workers’ comp coverage will cover the costs of medical expenses and lost wages. But, more importantly, you can feel good knowing that the people who work hard for you are protected.

Do you need workers’ comp for your construction business? The short answer is yes. Not only is it likely to be mandated by law in your state, it’s also a smart financial choice to protect you - and your employees - against the high cost of injuries as you build a business in the high-risk construction industry.

 

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