Many contractors throughout Central New York face this exact situation. You're dealing with the challenge of understanding insurance requirements that could affect your ability to secure commercial contracts. The worry isn't just about the cost—it's about making informed decisions that help your contracting business grow.
At the Horan insurance agency, we work with contractors across Central New York to help them understand workers comp requirements and explore coverage options from multiple carriers. We can assist in providing information about how this coverage works and when it might make sense for your situation.
This article covers why clients require workers comp coverage, what's involved in obtaining a policy, and factors to consider when deciding if this coverage fits your business requirements.
What is the Purpose of Workers Compensation?
Before we dive in, let’s acknowledge what workers comp insurance is used for.
Remember that, if you don’t have your own policy, the following list are things your client would be responsible to cover if you were to be injured while doing work for them.
Your client won’t want to bear that responsibility or burden.
Why Do I Need to Have Workers Comp Insurance?
You can thank New York State for this one. Part of New York’s Labor rules requires companies to purchase workers compensation insurance for their employees.
It’s straightforward concerning a business with actual employees, but it becomes murky for those who are self-employed.
At the end of the year, your client’s insurance company will perform an audit of their W-2, 1099, and cash payments to individuals and companies.
For those who were issued a 1099 or who received cash payments, the auditor will want to see proof of workers comp insurance held by those vendors.
For all vendors who fail to show proof of workers comp, the monies paid to them will be added to your client’s workers comp audit.
This is a major headache for your client because it can get expensive.
When your client can show proof that you had your own workers comp policy—even though you’re a one-person operation—they are exempt from having to include you in theirs.
Things to Consider Before Obtaining Workers Comp Insurance
To know for certain if a workers comp policy will be worthwhile for you and your situation, there are a few things you'll want to consider, starting with the big two:
- How much profit do you expect from this job? Workers comp policies for contractors can vary in cost depending on several factors.
- If you're the type of contractor who leaves the ground via ladder or scaffolding (think painters, roofers, carpenters), securing a policy may present additional considerations due to the associated height risks.
Landscapers, flooring installers, or janitorial contractors may have different considerations, but the cost should be evaluated carefully. Workers comp premiums can represent a significant expense for business owners.
The only way to be certain about what you're in for will be to obtain a quote for workers comp coverage. You'll also want to consider how many other clients will have this requirement.
Workers comp is not a per-job policy but rather an annual one. So, if you're going long term it could be advantageous from a profitability standpoint since you'll have coverage that may help you qualify for more commercial opportunities.
Should I Purchase a Workers Comp Insurance Policy for My Business?
Many small contractors like you do not carry workers comp insurance. With a policy in place, you'll have coverage that may help you qualify for more commercial opportunities, thus potentially helping to fill your calendar with more preferred clients.
But if you forgo the policy you'll have fewer opportunities to secure commercial jobs and will likely need to stay with more residential ones until you decide to purchase workers comp coverage.
As an agency that has worked with contractors throughout the greater Syracuse area, we understand this can be a challenging decision.
You don't want to waste money on insurance, but you don't want to leave money on the table either.
We can help provide information about when workers comp coverage might make sense for contractors in different situations.
You're now armed with information and are more insurance savvy than others in your industry.
Making Your Workers Comp Decision with Confidence
Understanding workers comp requirements helps you make informed decisions about your contracting business. When you have clarity about coverage costs and requirements, you can plan for growth opportunities that align with your business goals.
Without this coverage, you may find yourself limited to residential projects or unable to compete for larger commercial contracts. However, with workers comp in place, you'll have met a key requirement that many clients expect from their contractors.
The Horan insurance agency can assist contractors throughout Central New York with information about workers comp coverage from different carriers. We aim to help you understand your options and make decisions that support your business objectives.
Click the Get a Quote button below to explore workers comp coverage options for your contracting business.
Take an even deeper dive into New York Workers Comp.
