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





Popular posts from this blog

Delaware Legislature Preparing To Revisit Dram Shop Liability

Here we go again. Representative Peterson is preparing to introduce limited dram shop liability for consideration. The legislation caps the liability at $250,000 but, as is usually the case, this creates a starting point where limits are eventually increased once it's decided by the powers that be that the current limit is too low. This also puts restaurants, bars, etc, at an increased risk due to the vague wording of the legislation, specifically "reckless" sale of alcohol by the business. Also, you can be sure that if this legislation is passed, that rates will go up commensurately for not only Liquor Liability coverage, but if actual damages begin to be paid out under this law, that insurance rates on the whole will see an increase.
Read more

Get employees back to work quickly to keep work comp costs down

Image
In the past I have spoken to clients regarding a particular workers compensation claim affecting them and have asked if they have brought the employee back to work yet. Too many times the answer is no, they have nothing for that employee to do since said employee is not 100% and unable to perform their specific job prior to their workers compensation injury/claim. The problem with this is that too often employers miss the point that even though an employee can't perform in the position they were in prior to their injury, it behooves the employer to create some type of alternative task/job the employee can do until such time they are able to resume their normal duties. Bringing that employee back to work means that work comp benefits /payments in that particular claim are being curtailed, thereby saving the employer potentially more being paid out, while adding to their experience mod and driving their overall work comp expenses up.
Read more

Important to notify insurance company of potential liability claims

Image
When trying to manage their insurance policies, many business owners make the decision not to turn in potential claims and decide to take care of them on their own. By paying for small claims, such as property damage, etc, they strive to keep claim frequency down and in turn keep renewal premiums down. One area of insurance they should not try to manage though is potential liability situations/claims. Most policy conditions require prompt notification of any potential liability claims to the insurance company and if a claim isn't turned in promptly, the policy language does note that the company can deny a claim due to late notification. It's important to do this early on since information/memories are still fresh and it gives the insurance company time to completely investigate the potential claim. The potential for a liability claim is most likely the small business owner's greatest area of risk, whether they operate a restaurant, cleaning service or any other busi...
Read more