Certificates of Insurance For Workers Compensation
Three things on Certificates of Insurance – This is a continuation of the last post.
After reading the last post, you may be wondering if span of control over a worker determines if they are independent or not. I take the position that if a company or worker provides a certificate of insurance then the insurance carrier cannot charge premium for them as they have already paid for insurance once.
Why would the main contractor have to re-pay for the same coverage? If there was an accident, the subcontractor’s insurance would pay as primary. They have to pay to statutory limits. The main contractor’s insurance would never have to pay. If a carrier is never going to cover the subcontractors in question, why charge the main contractor a premium? I have received many emails from agents, underwriters, and premium auditors that indicate that my position is wrong. My bottom line is there is no law that says a worker/subcontractor/independent contractor has to be covered twice for the same incident.
With that said – there are three ways for the main contractors to protect themselves from being overcharged for independent contractors –
1. Read my last post on independent contractors and try to follow the IRS rules as much as possible.
2. Always have current certificates of insurance on file from the subcontractors. If one expires while a subcontractor is working for you, then your Workers Comp coverage may be responsible for an accident or receive a premium bill for the subcontractor.
3. Always make sure your agent and premium auditor have a copy of all the current certificates of insurance for all subcontractors that are working on a job for your company. When the premium auditor requests the payroll information, provide him/her with the current certificates of insurance along with the your employees’ payroll information.
Up Next – The Ladder of Insurance
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