When A Subcontractor Has No Certificate of Insurance – How it can affect you.

From a workers compensation perspective, when a subcontractor has no certificate of insurance it probably means he has no workers compensation insurance policy in place. So what does that mean to you if you’re the hiring contractor and have hired an uninsured subcontractor to do a job for you?

Here’s a few things to consider:

  • Your workers compensation policy will respond to any injury the sub or his employees may incur.
  • Any claims that are paid under your policy will have a negative effect on your claims experience.
  • Claims paid will enter into your experience modification calculation and could effect your experience mod factor for a period of three years resulting in a higher workers comp cost for you for that time.
  • An uninsured subcontractor may be considered a “statutory employee.” All payments you made to the uninsured sub may be picked up at audit of your workers comp policy resulting in a significant increase of your premium.

The use of uninsured subcontractors can have a significant negative effect on an employer. Many times these situations go unnoticed until a claim occurs or an audit is conducted where the hiring contractors insurance company discovers the lack of coverage. Most of the time it’s to late when these events happen. Not only from an immediate additional premium from your insurance company at audit but potentially from the negative effect a claim may have on your experience mod for up to three years!

Managing subcontractors, at least from a workers compensation perspective, requires attention and knowledge. Learn more about this topic at our website WorkCompConsultant.com .

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