Workers Compensation and Independent Contractors
Premium Charge for Subcontractors – This is directly from one of our insurance companies and tells you exactly what you need to know about Workers Compensation and Independent Contractors.
If you hire subcontractors who do not have their own Workers‘ Compensation insurance, your premium calculation will be modiﬁed to include any amounts paid for their labor. This additional premium is addressed in Part Five C 2 of your policy and compensates us for the risk that one or more of these subcontractors (or one of the subcontractor’s employees) will ﬁle a claim for beneﬁts under your coverage.
Although subcontractors may appear to be independent businesses, claims ﬁled by them (or their employees) are common after an injury. Under Workers‘ Compensation law, the legal deﬁnition of “employee” is much broader than the common understanding of that term. In addition, many states make you – as the contractor – automatically responsible for certain expenses due to work-related injuries to your independent subcontractors or their employees. Regardless of the state law, Berkshire Hathaway GUARD Insurance Companies must pay legal fees under Part One of your policy to defend these claims and must also pay
Workers‘ Compensation beneﬁts in many cases.
For these reasons and in accordance with Part Five C 2 of your policy, we will charge appropriate additional premium unless the subcontractors have their own in—force Workers’ Compensation coverage during your entire policy period, and you are able to provide acceptable proof of this coverage to us prior to completion of your ﬁnal audit. Evidence of general liability insurance, pre-determinations or statements of independent contractor status, hold harmless agreements, etc. are not acceptable substitutes, and no exceptions will be made for sole proprietors or others on the grounds that such parties are topurchase (org_a_g_|3_gt
purchase) Workers‘ Compensation insurance.
The risk of a claim against your policy from an uninsuredsubcontractor is the same, regardless of his or her reason for having no coverage. Furthermore, these
additional charges will be imposed when applicable, even if exceptions have been granted to you by us or by
another carrier in the past.
Please realize that premium may be charged for subcontractors hired by uninsured entities owned or controlled by you. Premium will be charged if the Rating Bureau rules in your state require the related entity to be combined in a single policy with the company we are insuring.
Ultimately, we believe this policy is in the best interests of all parties, and we hope that this advance notiﬁcation will prevent any misunderstandings at a later date. As always, we thank you for selecting Berkshire Hathaway GUARD Insurance Companies, and we look forward to serving you during the upcoming
*Note: A “subcontractor” is a person or organization paid to assist you in providing a product or service to your customer or client (and not just to you). Workers’ Compensation laws in most states presume that such vendors are “employees” who, therefore, often file claims seeking