Should I Buy Workers Compensation For Independent Contractors ...

Greenpoint Insurance Advisors, LLC
All Rights Reserved?Copyright 2012

A common question from business owners is why buy workers compensation versus using a business general liability policy to cover independent contractors.? In Colorado, the definition of independent contractor must be met with a test to determine if someone is truly within this category.? The test is based on factors that includes whether or not the contractor has their own business cards, separate business name, and who controls their time.? If they fail to meet these requirements, then they are considered an employee and should be covered by workers compensation insurance.?

What About Independent Contractors That Work For My Company?Are They Covered?

Possibly under your business liability insurance there might be coverage if someone was to get injured while doing work for your business.? The key words are possibly and might!? However, it depends on a number of important factors you must research:

1. Policy Form or Contract:? Every policy can be different.? Some insurance carriers use their own contracts others use standardized forms.? Tead through the policy to find out what?s applicable in your situation.? Otherwise, you?re making decisions blindly.?
2. Coverage Territory:? You need to know what is the territory for triggering coverage.? For example, you have an independent contractor who is working for you in California when your company is based in Denver.? They get injured in Texas.? Will your policy cover the independent contractor in Texas?? You need to read through the coverage territory section and exclusions.
3. Definition of Employee:? Who is an employee versus independent contractor?? There should be a definition to help determine if coverage will be provided by the insurance carrier.?
4. Exclusions:? Read through each exclusion section to find out if there?s any situations that might create a problem for your independent contractor.? I?ve seen policies exclude a ?hired person? under the medical section of the liability policy.? For example, you have an independent contractor who was in a car accident while working for your company.? The medical bill is $1,000.?? They file a claim under your general liability policy for reimbursement.? Remember, your business doesn?t have workers compensation because this person is truly an independent contractor.? The insurance company denies the claim because they fall within the definition of hired person.? The independent contractor is left to file a lawsuit to recover damages against the business. ?
5. Consult Your Attorney:? These are important decisions.? Solid legal advice can help protect you and your business when it comes to making this decision.

If you have any doubt about if a person is an employee versus? subcontractor or trying to save money to avoid paying for workers compensation?take the time to conduct the research.? One injury or lawsuit against you and your business will be one of those lessons you would have preferred to avoid.

Source: http://www.gpbusinessinsurance.com/2012/02/should-i-buy-workers-compensation-for-independent-contractors/?utm_source=rss&utm_medium=rss&utm_campaign=should-i-buy-workers-compensation-for-independent-contractors

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