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workers comp:  do you need it if self employed
November 30, 2017
workers comp:  do you need it if self employed  
    I have my alarm license in New York state and carry general liability insurance. I am owner/operator with no employees. I recently became a subcontractor for another alarm company also in New York to do its service calls. They requested I get workman's compensation. When I told them I don't have employees and I don't need to get workman's compensation, their response was their insurance company requires all subcontractor's to have workman's compensation. 
    I suppose if I get injured on one of their service calls they would want me to make a claim under my workman's comp and not theirs. So under New York State law do I need to get workman's comp insurance?  Also at the end of the year when I get audited and show no payroll because I have no employees, will I be able to renew my workman's comp?
Thanks in advance
    As a practical matter your GC or subscriber is requiring you to have WC.  You want the work, you need to get the insurance.  
    The GC is smart requiring you to have WC.  Why?  Because if [or more likely when] the GC gets audited by its WC carrier the carrier is going to pick up and charge for every employee and every subcontractor who doesn't have its own WC.  The GC will get charged for and have to pay the additional premium.  And, by the way, the employee or subcontractor who was not listed on the WC policy at the time of the injury will not be covered by the carrier for the WC benefits.  [but they will be added to the premium after the audit].  
    If a subcontractor with no WC gets injured he or she is going to sue the GC or the subscriber because they may be the only deep pocket around, especially if the injured subcontractor's health insurance [if he has any health insurance] won't pay for work related injuries.  Compelling the subcontractor to carry WC is good for the GC, the subscriber and the subcontractor.
    If you have employees and you don't carry WC or list them on the policy [off the books employee] then as employer you can be sued for any on the job injury.  That's not the case if you have WC; the employee is limited to looking to the WC carrier for benefits.  
    If you are a one man operation, no employees, you may not be required to carry WC.  But you should.  Why?  You health insurance may not cover you for an on the job injury.  If health insurance is all you have you better check the coverage for work related or even automobile injuries.  If you do have WC however then, even though you are the owner of the business, you can collect the same benefits as any employee would be entitled to.  I confess I didn't know that, but that's the case according to NY insurance broker Richard Butwin [see his comments below].  An injured owner with WC can collect lost wages, medical expenses and death benefits.  [keep in mind that WC law can be different in your state] 
    Here is what Richard Butwin had to say - and if you need a NY insurance broker, he's a great choice.
    We love Workers Comp, maybe not 1 man groups, but it is part of every one of our commercial accounts.
    There are 2 sides to situation. The General Contractor (GC) or whomever is hiring the sub, and the sub.
From the perspective of GC, if the sub does not have WC coverage, there are 2 exposures. (1) the GC has to pick up the coverage on their own audit (2) they are subject to a General Liability claim if the Worker gets inured.
    For several reasons, if is not practical/appropriate for the GC to pick up the exposure on their own policy unless it is part of a wrap-up, which is unlikely for a single person to be involved in.
    From the perspective of the subcontractor, they need to do this to get the job. In addition, they could collect medical, lost wages and god forbid a death benefit. Technically, medical insurance excludes work related injuries. His family would also be potentially eligible to collect under Employer’s Liability. The NY State Insurance Fund is familiar with this situation and can provide coverage directly.
    An employee does not get an additional benefit from the employer. There are situations where the subs payroll x rate = premium is higher than the maximum benefit. The GC could possibly endorse his policy to cover “independent contractors”. I would advise my GC client not to do it because you are picking up unnecessary exposure. The GC can only add their own employees as employees. 
    I hope this helps.
Richard S. Butwin, President & CEO
60 Cutter Mill Road, suite 414 • 
Great Neck, NY 11021
(516) 466-4200  x-111

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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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