If you hire a subcontractor where the owner is excluded from their policy, not only can their payroll be picked up and included in your policy audit they also can be entitled to claim benefits under your policy.
Always verify that the owners are included in the policy! This box should be checked “N” at all times.
Why Owning Your Business Doesn’t Mean Skipping Workers’ Comp: A Guide to Verification
The freedom and flexibility of being your own boss are undeniable perks of small business ownership. But with that freedom comes responsibility, especially when it comes to employee well-being. Workers’ compensation insurance protects employees in case of a work-related injury or illness. But what about the business owner themself? This blog post will delve into the importance of workers’ comp for owners, along with ways to verify coverage.
Why Should Business Owners Consider Workers’ Comp?
While some states exempt sole proprietors or single-member LLC owners from mandatory workers’ compensation coverage, accidents can happen to anyone, anywhere. Here’s why considering workers’ comp for yourself might be a wise decision:
- Peace of Mind and Financial Security: A work-related injury can lead to hefty medical bills and lost income. Workers’ comp can help cover these costs, offering a financial safety net during a difficult time.
- Improved Employee Morale: Extending workers’ comp coverage to yourself demonstrates a commitment to employee well-being, potentially boosting morale and fostering a positive work environment.
- Compliance with Changing Regulations: State regulations regarding workers’ comp can change. Opting in for coverage now ensures you’re compliant with any future mandatory requirements.
Verifying Workers’ Comp Coverage
If you’re a business owner considering adding yourself to your workers’ comp policy, or you’re working with a contractor and want to ensure they’re covered, here are some ways to verify coverage:
- Request a Certificate of Insurance: This document, issued by the insurance carrier, will confirm the existence and details of the workers’ comp policy.
- Check with the State Workers’ Compensation Board: Many states have online databases where you can search for a business’s workers’ comp coverage status.
- Contact the Insurance Company Directly: If you have the insurance company’s information, you can reach out to them directly to inquire about a specific policy and its coverage details.
Important Considerations:
- Cost: Adding yourself to the workers’ comp policy will increase your premium costs.
- State Regulations: Eligibility for workers’ comp as a business owner varies by state. Be sure to research your state’s specific regulations.
- Pay vs. Payroll: Workers’ comp premiums are typically calculated based on payroll. Determine how much of your owner’s draw will be considered “payroll” for coverage purposes.
The Takeaway:
Workers’ compensation protects employees in the event of a work-related injury. While not mandatory for all business owners in every state, it’s a valuable consideration for financial security and peace of mind. Understanding verification methods empowers you to confirm coverage for yourself or your contractors. Remember, prioritizing the well-being of yourself and your team is an essential part of responsible business ownership.