Delaware Business Insurance Update from CNC Insurance Associates Inc. "Delaware Work Comp, Independent Contractors, And General Contractors, So Confusing??" 1-9-16

A few years ago  Delaware changed the law requiring independent contractors that are sole proprietors, in the construction trades to get work comp coverage on themselves. They also made general contractors responsible for the work comp premium if they use independent contractors that do not have the coverage. If the independent contractors are a corporation or an LLC then the individual can exempt themselves ( and other officers), from Work Comp coverage with the proper corporate documents and Comp Bureau forms. Also the general contractors will not be charged for the independent's work comp. This sounds pretty straight forward right? well, there is still much confusion.
 This confusion always comes to the surface during an insurance audit. The insurance company auditors are charging general contractors for the work comp coverage of independent contractors if their exemption paper work or certificates of insurance are not up to date or accurate. In addition insurance company auditors are reaching with these rules and applying them to independent contractors that are not construction related. An example of this is charging the general contractor for the work comp of an interior decorator that comes in to decorate the office. The decorator is not in the construction trades under the law, but the auditors interpret differently.
So attention Delaware General Contractors, when hiring independent contractors remember these 3 things to avoid frustration:
1) If an independent is a sole proprietor then they are required to carry work comp or you will be charged for them as employees under your work comp.
2) If an independent contractor is a corporation or LLC they can exempt themselves under Delaware Law, with the proper forms filed with the Comp Bureau. Keep copies of these documents for the insurance auditor and this will guarantee you will not be charged for the independent's work comp coverage.
3) Make sure all certificates from independent contractors are up to date and accurate.


Call your insurance professional for guidance or you can contact me and I will be glad to go over these rules with you or your insurance auditor. Until next time be careful out there and know your risks.


G. Kevin Nemith,  President CNC Insurance Associates Inc. & The Small Business Insurance Center
Serving DE, MD, VA, NJ, & PA
www.cncinsurance.com
www.bizinsurancetv.org





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