Workers’ compensation insurance for installation contractors

Whether you specialize in HVAC, drywall, or appliance installation, physical labor can lead to serious injury. Even a simple accident, such as tripping over a loose cable, can result in costly medical bills. Workers’ compensation benefits and coverage can help your business with:

• Medical expenses from work-related injuries and illnesses
• Disability benefits
• Death benefits
• State law compliance
• Employee injury lawsuits

• Immediate medical care, such as an ambulance ride and emergency room expenses
• Ongoing medical costs, including medications and physical rehabilitation
• Disability benefits while the injured worker is unable to work

Usually included in a workers’ comp policy, employer’s liability insurance provides protection when an employee decides the business owner was at fault for an injury. Employer’s liability insurance can help pay for:

• Attorney’s fees
• Court costs
• Settlements or judgments

Even if a lawsuit is found to be frivolous, you could find yourself paying for a costly legal defense if not adequately insured.

The amount you pay for workers’ compensation insurance is a specific rate based on every $100 of your business’s payroll. Your premium is determined by the type of work done by your employees (classification rate), your experience modification rate (claims history), and your payroll (per $100).

The formula providers use in underwriting to calculate workers' comp rates is:

Additionally, workers’ compensation insurance providers use National Council on Compensation Insurance (NCCI) class codes to determine how low- or high-risk your business is to insure and how much to charge you for your insurance.

It's important to accurately report your codes so you don’t overpay for your workers’ compensation insurance or get penalized for underreporting your risk.

Currently, 35 states use the NCCI system, 10 use a modified version of NCCI's class codes, and five have opted out entirely to utilize their own classification system. These five states are: California, New Jersey, New York, Delaware, and Pennsylvania.

Each state has its own set of laws for workers’ compensation requirements. For example, installation businesses in Pennsylvania are required to carry workers’ compensation coverage for all employees, including part-time workers. However, Georgia businesses only need to carry the policy when they regularly employ three or more employees.

While self-employed small business owners, independent contractors, sole proprietors, and partners usually don’t have to carry workers’ compensation insurance coverage, you can purchase a policy to protect yourself, too. It's a good idea to carry this coverage for financial protection against work injuries, which health insurance might not cover.

In certain states, installation contractors must purchase coverage through a monopolistic workers' comp state fund. Those states are:

• North Dakota
• Ohio
• Washington
• Wyoming

If you purchase workers’ comp through a monopolistic state fund, it might not include employer’s liability insurance. However, you can purchase it as stop gap coverage from a private insurance company.

Work injuries that lead to insurance claims can increase your premium. However, any company can mitigate its risks. For example, you could:

• Provide dollies and hand trucks
• Require workers to wear gloves and helmets
• Teach safe lifting techniques

Taking these steps could reduce workplace injuries, along with your insurance premium.

Workers’ comp coverage protects your employees and to some extent your business, but it doesn’t cover every risk. Installation business owners should also consider:

General liability insurance: This policy covers expenses related to customer injuries and property damage, such as accidental damage to a hardwood floor. It's often required for a commercial lease.

Business owner's policy (BOP): A BOP bundles general liability coverage with commercial property insurance at a discount. It protects against common accidents and business property damage.

Commercial auto insurance: This policy covers costs in the event of an accident involving a vehicle owned by your installation business. Most states require this coverage for vehicles owned by a business.

Contractor’s tools and equipment insurance: This policy helps pay for repair or replacement of an installation contractor’s tools and equipment if they are lost, stolen, or damaged on a job site.

Cyber insurance: Any business that handles personal information, from credit card numbers to email addresses, should carry this coverage. It covers costs related to data breaches and cyberattacks.

Are you ready to safeguard your installation business with a workers’ compensation insurance policy or another type of insurance? Complete Insureon’s easy online application today. You can also speak with a licensed insurance agent for more information on your specific business risks.

Once you find the right policy, you can begin coverage and receive a certificate of insurance (COI) in less than 24 hours.