Workers Compensation
State-mandated insurance that pays for medical treatment and lost wages when an employee is injured on the job. In exchange for no-fault benefits, the employee typically gives up the right to sue the employer for the injury.
Workers compensation is the mandatory no-fault insurance system that pays for an employee's medical care and lost wages after a workplace injury. It is a state-administered program, and nearly every state requires employers to carry it.
The Bargain Behind Workers Comp
Workers comp was built on a trade. The employee gets guaranteed benefits without having to prove fault in court. In exchange, the employee usually cannot sue the employer for a workplace injury. That exchange keeps workplace injuries out of the civil court system and puts them in a faster, more predictable administrative process. Every state has its own version of this statutory bargain.
What It Covers
Covered benefits typically include medical treatment, partial wage replacement during recovery, permanent disability benefits if the injury is lasting, vocational rehabilitation, and death benefits for fatal accidents. Benefits are payable regardless of whether the employee or the employer was at fault, provided the injury arose out of and in the course of employment.
Why Contractors Pay Close Attention
For restoration and roofing contractors, workers comp is one of the largest line items in their insurance program. Premiums are priced per payroll dollar at classification rates that can exceed 10 percent for high-risk trades, and experience modifiers (ex-mods) adjust each contractor's rate based on their own claim history. A bad loss year can raise premium for three years after the loss. Strong safety programs, early return-to-work processes, and accurate job classification all influence the long-term cost of coverage.
Frequently asked questions
In nearly every state, yes, if the contractor has employees. Specific thresholds and exemptions vary — some states exempt very small employers, sole proprietors, or owner-only LLCs. Check state law for specifics. Penalties for operating without required coverage are significant.
Generally yes. If a subcontractor is a separate business with its own employees, the subcontractor carries its own policy. A general contractor typically requires proof of subcontractor workers comp coverage via a certificate of insurance. If the subcontractor is uninsured, the general contractor's policy may be responsible for the injury.
Premium is calculated on payroll by classification code. Each job type has a rate reflecting its injury risk — roofing has one of the higher rates because falls are a leading cause of claims. An experience modifier adjusts the rate up or down based on the contractor's actual claims history.
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