One of the most frequent questions I get from GCs who are also sole owners is, why do I need a work comp policy? Let’s examine that today.
Work comp coverage is a State mandate, it grants coverage for injuries and work loss to an injured worker in any situation where an employee/employer relationship exists. Yes, that is predominately W2 employees, but also covers helpers, cash laborers, family members, 1099 employees, and subs who are not working under a written agreement and have submitted a certificate of insurance. This list is not exhaustive by the way. Oh, and you do not determine the relationship, that is done for you by the Department of Labor.
Further, in Kentucky, the injuries to an uninsured subcontractor’s employee are automatically passed on to the general. Even if you get a certificate from everyone who does work on your behalf, the reality is that their policy may not be in place at the time of the accident, in which case it is absolutely necessary that you have your own policy to protect your assets.
Additionally, many business owners exclude themselves from their own policies as is their right. So, if the owner wishes to assert a claim that he was acting as an employee of yours at the time of claim, they can. If you have a policy, your defense, and if necessary, indemnification, is provided. No policy, you’re hiring your own attorney and hoping for a favorable judgment.
Should you have questions on how broad the definition of employee is, or would like for Greater Lexington Insurance Agency to review specific situations, please call me at 859-224-2477.
– David Thornton
