A WORD TO THE WISE ABOUT WORKMAN'S COMP INSURANCE -Tim Larkin
Did you know that many contractors out there put you "at risk" because they do not follow their legal obligation to insure their workers?
In the State of California, it is the law for every contractor who has "any" employee helping them do their job, to have a mandatory Workman's Comp policy on that employee. The government puts strict penalties on contractors who avoid this insurance because the non covered work injuries and/or falsified disability claims are costing the tax payers millions of dollars every year. The problem with so many contractors not paying their fair share of this responsibility simply means that the "other"contractors who do follow the law, end up carrying the full responsibility of the costs for all the medical claims that fall back on the state disability. As a result, their insurance premiums are increased every year to compensate for the thousands of uninsured cases. Their insurance premiums are completely out of control, and they keep rising every year, even when they have no injuries reported themselves. Some contractors pay thousands of dollars every month for workman's Comp on top of all their other overhead. This is why their service rates may seem higher than those contractors who do everything "under the table." Like most contractors who do things by the book, I desire that all contractors would bid jobs on an even playing field. Even though so many people out there hire the uninsured, or unlicensed contractors to save money, they are taking such a huge risk in doing so, and chances are, their hired contractors are cutting more corners on their project than just insurance fraud, to save money. Unfortunately, it is only when something goes wrong, that they pay such a huge loss because they were misinformed or just unaware of the high risks they were taking. Did you know it is illegal to hire an unlicensed contractor to do a project over $500? You can actually lose your rights to sue them in court if they walk off your job half done. The uninsured/unlicensed contractors know this, so if something goes wrong on your project and they know they have violated the law without license or insurance, they will simply disappear and you may never know what actually happened. In the case of Workman's comp fraud, some employees will get hurt on purpose, simply to collect workman's comp. The state pays for this benefit and comes after you for reimbursement if your contractor is uninsured. If your contractor does not have Workman's Comp insurance, his injured employee has the right to come after you or your home owner's insurance for compensation, even if he was hired illegally.
HOW DO CONTRACTORS LIE TO EXPLAIN OR JUSTIFY THEIR "EXEMPT" STATUS?
1) For one thing, they will tell you that they only bring with them "licensed" contrators who have their own insurance. The problem with that is, the other contractor's license is never shown, and their insurance would not apply because the job is not under the name of the insured. If they get hurt, you will be responsible for the medical needs, as well as the malpractice fines if the employer is missing or unable to pay.
2) They may claim to have workman's comp insurance but don't really insure every employee in your home. One way of knowing if they don't have every employee insured is how they pay their employees. If they take taxes out of their employee's checks, instead of paying them cash at the end of the day, it is a good sign that they don't pay workman's comp on those employees. The cost of Workman's comp is paid based on actual reported payroll. If a contractor picks up his employees off the street, or fails to pay taxes on his workers, he is committing insurance fraud.
BOTTOM LINE: IT IS NOT WISE OR LEGAL TO HIRE AN UNLICENSED/UNINSURED CONTRACTOR WITHOUT WORKMAN'S COMP, IN THE STATE OF CALIFORNIA, FOR SERVICES THAT COST OVER $500 PER DAY, OR PER PROJECT. SOONER OR LATER IT CATCHES UP TO THE EMPLOYER AND/OR THE CONSUMER. TAKING THE RISK IS JUST NOT WORTH THE PENALTIES WHEN SOMETHING GOES WRONG. AND WE ALL KNOW MURPHY'S LAW: "IF SOMETHING CAN GO WRONG, IT USUALLY DOES."
Did you know that many contractors out there put you "at risk" because they do not follow their legal obligation to insure their workers?
In the State of California, it is the law for every contractor who has "any" employee helping them do their job, to have a mandatory Workman's Comp policy on that employee. The government puts strict penalties on contractors who avoid this insurance because the non covered work injuries and/or falsified disability claims are costing the tax payers millions of dollars every year. The problem with so many contractors not paying their fair share of this responsibility simply means that the "other"contractors who do follow the law, end up carrying the full responsibility of the costs for all the medical claims that fall back on the state disability. As a result, their insurance premiums are increased every year to compensate for the thousands of uninsured cases. Their insurance premiums are completely out of control, and they keep rising every year, even when they have no injuries reported themselves. Some contractors pay thousands of dollars every month for workman's Comp on top of all their other overhead. This is why their service rates may seem higher than those contractors who do everything "under the table." Like most contractors who do things by the book, I desire that all contractors would bid jobs on an even playing field. Even though so many people out there hire the uninsured, or unlicensed contractors to save money, they are taking such a huge risk in doing so, and chances are, their hired contractors are cutting more corners on their project than just insurance fraud, to save money. Unfortunately, it is only when something goes wrong, that they pay such a huge loss because they were misinformed or just unaware of the high risks they were taking. Did you know it is illegal to hire an unlicensed contractor to do a project over $500? You can actually lose your rights to sue them in court if they walk off your job half done. The uninsured/unlicensed contractors know this, so if something goes wrong on your project and they know they have violated the law without license or insurance, they will simply disappear and you may never know what actually happened. In the case of Workman's comp fraud, some employees will get hurt on purpose, simply to collect workman's comp. The state pays for this benefit and comes after you for reimbursement if your contractor is uninsured. If your contractor does not have Workman's Comp insurance, his injured employee has the right to come after you or your home owner's insurance for compensation, even if he was hired illegally.
HOW DO CONTRACTORS LIE TO EXPLAIN OR JUSTIFY THEIR "EXEMPT" STATUS?
1) For one thing, they will tell you that they only bring with them "licensed" contrators who have their own insurance. The problem with that is, the other contractor's license is never shown, and their insurance would not apply because the job is not under the name of the insured. If they get hurt, you will be responsible for the medical needs, as well as the malpractice fines if the employer is missing or unable to pay.
2) They may claim to have workman's comp insurance but don't really insure every employee in your home. One way of knowing if they don't have every employee insured is how they pay their employees. If they take taxes out of their employee's checks, instead of paying them cash at the end of the day, it is a good sign that they don't pay workman's comp on those employees. The cost of Workman's comp is paid based on actual reported payroll. If a contractor picks up his employees off the street, or fails to pay taxes on his workers, he is committing insurance fraud.
BOTTOM LINE: IT IS NOT WISE OR LEGAL TO HIRE AN UNLICENSED/UNINSURED CONTRACTOR WITHOUT WORKMAN'S COMP, IN THE STATE OF CALIFORNIA, FOR SERVICES THAT COST OVER $500 PER DAY, OR PER PROJECT. SOONER OR LATER IT CATCHES UP TO THE EMPLOYER AND/OR THE CONSUMER. TAKING THE RISK IS JUST NOT WORTH THE PENALTIES WHEN SOMETHING GOES WRONG. AND WE ALL KNOW MURPHY'S LAW: "IF SOMETHING CAN GO WRONG, IT USUALLY DOES."
RSS Feed