Do I need to cover independent contractors for workers comp?

Short answer – yes. But…there are better ways than simply adding that payroll to your policy.

Independent contractors in Tucson, Sahuarita, or Green Valley, AZ may or may not be required to carry their own workers compensation policies. If they have their own coverage, simply ask for a "Certificate of Insurance" for proof of coverage, and keep that record with your workers compensation papers to provide your insurance company a copy at premium audit time.

If you do not have proof of coverage from your independent contractors, your firm will be charged a premium based on the contract price and payments. This premium can be significant, and it is easily avoided.

Suppose your independent contractors do not have their own policies? Get one for them, independent of your coverage. Why?

  1. Losses generated by their actions will count against your experience rating if your company policy covers them. This action raises your premiums for three of the next four years.
  2. You do not control their payroll accounting. Poor records may increase premium charges.
  3. The act of hiring outside contractors implies thier operations are unusual to your standard operations, or at least not anticipated by your operations. Admit you do not have loss control expertise and get some help from their insurance company.
  4. Let them administer their own employee benefits. Why take on added costs for their overhead, unless it’s contemplated in the negotiations for services.

A typical situation is contract haulers. Independent haulers can be one-man companies who do not have workers compensation coverage, nor do they have any requirements to obtain coverage. They also hire day labor to help unload trucks on a regular basis. If they have workers compensation, the day laborers are covered under the truckers policy. Untrained workers lifting heavy boxes is a recipe for large claims. Avoid this risk be insisting on certificates of insurance.

Call our Insurance Center at Green Valley Agency for help with this common issue. And remember: a safe work place is the best employee benefit.