Workers Comp Prices & Options


#1

I have a park in Georgia. Some homes need repairs and one will need a roof soon. A guy who worked on the homes for a prior owner wants to do the work. He’s done some things for us in the past (carpentry, drywall, painting) and has always done a good job. And he could use the money, but he’s not insured.

I called our insurance company. I like my agent and feel he’s always been straightforward. He said I’d “go broke” if I tried to insure against everything and I sometimes need to “roll the dice.” I’m not a “roll the dice” kind of person. He said WC would be prohibitive because I’d have to get it through an assigned risk market. He suggested buying a policy for the individual who’d be doing the job and he could exclude himself from coverage to keep the rate down. This is the least expensive way to provide a COI, which he said protects me from liability. The cost would be $1500 and it covers no one.

This is called a “Ghost Policy” because it doesn’t actually cover anyone. You sign something saying you have no employees and you’re excluding yourself. If you hire anyone, you pay WC based on their class code. (To cover yourself, you must pay on a minimum of $51,400.)

I asked if I could buy the policy for myself (excluding myself) and then pay WC for anyone I hired. This would provide the insurance I’m seeking and I wouldn’t be limited to using one person. My agent cautioned against this because he said I’d have to pay high rates for anyone that did any work for me, unless they had their own WC policy.

I called the National Council for Compensation Insurance (NCCI) to research the rates - and they’re ridiculous. I’d have to pay $103.74 insurance per $100 I pay a roofer. Drywall installation is $47.57 per $100 and painting is $36.71 per $100. This is bad enough, but I’d also need to pay for any subcontractors I hire unless I get a COI showing they have WC. She went so far as to say that I’d have to pay WC on internet service because they install/repair onsite. I’d also have to pay WC on the costs of moving/setting any homes in the park (if the mover/installer didn’t have their own WC).

For plumbing, electrical, HVAC, we hire licensed professionals, so I’m assuming they have WC (I’d need to verify). The guy we’d like to hire would only be working part-time (occasional weekends) with total pay of less than $10k. He’d be using his own tools and setting his own hours (subcontractor). He’d be doing mostly small repairs on floors, drywall, painting, skirting, pressure washing, building steps, etc. I’m wondering if anyone here can share info on workers comp in the “handyman” capacity. Or any other ideas for dealing with this type of situation?

Many thanks.


#2

I, personally having done this, had the handyman parttime guy get his own insurance and provide proof of it for me. I’m not sure what type it was anymore and it didn’t cost a whole lot but I did not want to risk an issue. Pay a bit more for him but he’ll likely keep his costs lower because it sounds like he wants to work with you anyways.


#3

I would definitely make him get his own insurance. He’s self-employed.


#4

I would buy a worker’s comp policy and use the Class Code for Mobile Home Park/Trailer Park. This covers a broad spectrum of work.

Contact your states Mobile Home Park association and ask for a referral for worker’s comp.

You’d be surprised how quickly someone will say they were your employee after they get hurt working for you.

If they are not licensed contractors then you need to get your own coverage.

Another option is to have him sign up with a Temporary employment agency. They handle all the WC.


#5

Have you called Kurt Kelley’s office for a quote yet?


#6

Welcome to the world of government bureaucracy. There is no sneaky way to (safely) avoid WC insurance. Best thing is to hire a contractor who carries their own insurance, and have their insurance company send you a certificate showing that the policy is in force and what the limits are. If you hire a sub without insurance, or if you don’t have their insurance certificate on file, when your annual workers comp audit happens, you will have to pay WC on the sub just like they were an employee. The temp agency could be a good solution. Just make sure they are actually covered for the kind of work they will be doing for you.

WC insurance sucks, but everyone else has to follow these rules too. And paying for it sucks a lot less than paying for a huge injury lawsuit. Those rates per $100 you quoted do sound really high, but maybe that’s what they are in GA, I don’t know. You might try getting quotes from a few insurers.

FWIW, if my insurance agent told me “sometimes you’ve got to roll the dice”, I would seriously consider finding someone else. That strikes me as the wrong mindset for the person who is supposed to be helping you manage your risks. That’s just my opinion.

Good luck to you!
JW


#7

What direction did you end up going with this?