Ladder Of Workers Compensation Insurance Warning For Contractors
The Ladder of Workers Compensation insurance can wreak havoc on a Contractor’s policy.
I had originally written on this subject within the last year. As I have recently covered subcontractors, I thought this would be a good time to cover the Ladder of Workers Compensation Insurance (c) again. This is a term that I invented a few years ago.
The Ladder of Workers Comp insurance has to do with the responsibility of lawfully covering all employees with Workers Compensation insurance. The courts have taken the position if a subcontractor does not cover their employee with Workers Comp insurance then the main contractor would be responsible to cover the employee. The courts will “move up the rungs of the ladder” until an insurance policy is found to cover the employee for a given claim.
The Ladder of Insurance applies in all states. I have seen no exceptions to this circumstance. That is why it is beyond important to have current certificates of insurance for each subcontractor that works for your company.
Many years ago as an adjuster, I was working for a carrier that covered a certain school system for Workers Comp. I denied a claim where a subcontractor that was working for a school system fell off of a roof and unfortunately incurred fatal injuries. The subcontractor did not have current Workers Compensation coverage, but instead had provided the school system with an out-of-date certificate of insurance. The denial did not stand and the school system had to pay full death benefits. The subcontractor’s insurance carrier would not pay as they rightly denied coverage.
That was my first experience with the Ladder of Insurance. I do not want to be repetitive. The school system very quickly learned a tough lesson on certificates of insurance. They are worth obtaining from all subcontractors.
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