Very Popular Question – Uninsured Subcontractors and Workers Comp
One of the most popular questions that J&L Risk Management receives now involves uninsured subcontractors – usually a frantic call just before or after a Workers Comp premium auditor sends a company a letter that says they will need to provide the requested records. More frequently now, insurance agents call us with the same question at 800-813-1386.
Question Goes Like This….
We are <fill in the blank with company name>. We received a premium audit notice last week. The premium auditor is coming in on <date>, or the record upload is due on <date>. We may have a few or many uninsured subcontractors <usually individuals, not companies>.
The premium audit said that we now owe <Usually much larger $ than the deposit premium paid when the policy started>.
Most Important Premium Audit Question That I Ask on Uninsured Subcontractors
The first question I ask concerns Certificates of Insurance. See the pic at the bottom of this article for an example. Did you have or do you have certs for these individuals or companies? J&L can still review the premium audit for the company, but uninsured subcontractors are going to come up at every premium audit.
Quick Recommendation Going Forward
One of the best quick fixes going forward comes from the alternative markets. PEOs usually provide the quickest coverage for the most reasonable price, including many HR functions. Jim Walter Homes, not around any longer, used to provide 1099 companies and individuals with coverage for a % fee in the subcontract that was signed.
This financial insurance model was successful for decades. It allowed:
- The uninsured subcontractor to have workers comp insurance at reasonable rates using the buying power principle
- Jim Walter Homes knew that everyone was insured and likely made a small profit off the coverage.
I used to handle the claims that came in for multiple states for Jim Walter Homes.
PEOs would allow this model with a few alterations. If you think PEOs are a bad choice, check out this old article – NCCI said that they work.
GOING FORWARD is the key concept.
