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Workers’ compensation insurance for installation contractors

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Workers’ compensation insurance

Workers’ compensation insurance covers medical costs and lost wages for work-related injuries and illnesses. This policy is required in almost every state for businesses that have employees.

Workers’ comp protects employees at your installation business

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 insurance offers coverage for installation businesses in several areas:

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

Workers’ compensation can help pay for an injured employee’s:

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

Workers’ comp defends against accusations of negligence

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.

How much does workers' compensation cost for installation businesses?

The amount you pay for workers’ compensation 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 is:
Classification rate  x Experience modification rate  x (Payroll / 100) = Premium

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State laws set workers’ comp requirements for installation businesses

Each state has its own set of laws for workers’ compensation requirements. For example, installation businesses in Pennsylvania are required to carry workers’ comp insurance 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 independent contractors, sole proprietors, and partners usually don’t have to carry workers’ compensation insurance, 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.

Monopolistic state funds for workers’ compensation

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

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.

Lower your premium with risk management

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.

Other important policies for installers to consider

Workers’ compensation insurance 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.

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.

Get free quotes and buy online with Insureon

Are you ready to safeguard your installation business with workers’ compensation or another type of insurance? Complete Insureon’s easy online application today. Once you find the right policy, you can begin coverage in less than 24 hours.

Updated: November 3, 2023
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