Why do I need Workers’ Compensation Insurance?
Accidents happen, even to the most safety-conscious among us. When they do, Workers’ Compensation Insurance protects you from lawsuits. In New York it’s mandatory to cover all employees and penalties can be severe.
Depending on your business, you might not think you have employees to cover, but the NYWCB might think differently. And there are strict rules about classifying employees as contractors to get around workers’ compensation law.
Compared to the cost of an injury claim, premium costs are reasonable.
The most costly lost-time workers’ compensation claims result from motor vehicle crashes, averaging $72,777 per workers’ compensation claim filed in 2014 and 2015. The only other causes with above-average costs were burns at $48,957 and falls or slips at $45,606.
What’s more, New York workers’ compensation law requires insurance carriers to notify the Workers’ Compensation Board when a policy is cancelled, so skipping out won’t be easy.
What are the most common Workers’ Comp claims?
When people think Workers’ Comp, they typically think about manufacturing sweatshops and people losing limbs in giant machinery. But in fact, the most common claims arise from much less dramatic situations. In 2015:
- 33% of total cases were overexertion in lifting and lowering.
- 27% were falls, slips, and trips.
Workplace injuries cover a lot of ground, but here are some common scenarios.
Delivery van crash – You run a small florist shop and your delivery driver is involved in a crash, resulting in severe injuries and lifelong back problems.
Snowy walkway fall – Your security guard slips on newly fallen snow while making his rounds, resulting in a broken ankle and months of recovery.
CNA Overexertion – You operate a small assisted living community, and one of your aides pulls her shoulder out while assisting a resident, resulting in a torn rotator cuff surgery.
Workers’ Compensation Requirements in New York
- New York law requires employers operating in New York State to obtain and keep in effect workers’ compensation coverage for all employees, even part-time or family members employed by the company.
- The insurance carrier must be authorized by the New York State Workers’ Compensation Board.
- Another option is to be authorized by the Board to be self-insured individually or as part of a group.
- Failure to provide coverage is a crime punishable by fines and/or criminal prosecution.
- A sole proprietor, partners or the president, secretary and treasurer of a corporation are personally liable for a business’ failure to secure workers’ compensation insurance.
- An injured employee can directly sue an uninsured employer.
- An uninsured employer is responsible for all wage and medical benefits awarded to anyone ruled to be their employee. There is no cap on these benefits in New York.
Penalties for noncompliance
- Businesses are liable for a penalty for every 10-day period of noncompliance, plus the actual award (including both compensation and medical costs), plus any other penalties the Board assesses for noncompliance. In cases involving severely injured employees, the medical costs alone could be in the hundreds of thousands of dollars per injury.
- The amounts vary by infraction: Failure to secure coverage for five or less employees within a 12-month period is a misdemeanor punishable by a fine of $1,000 to $5,000. For more than five employees it’s a class E felony punishable by a fine of $5,000 to $50,000 and is in addition to any other penalties otherwise provided by law.
- There are additional penalties for misrepresentation and failure to maintain accurate records. You can find complete details here.
- In addition, a stop work order may be issued, costing you business.
- Uninsured employers are responsible for obtaining and paying for any legal representation required to defend against a workers’ compensation claim.
What about Workers’ Comp for Contractors In NY?
By nature of their business, contractors have more risk and present a more complicated insurance situation since there are many subcontractors working on the same site. If an individual is truly independent, the individual works under his/her own operating permit, contract or authority, and has their own worker’s compensation insurance. In some cases, the NYSWCB has determined some subcontractors to be employees. As a result, worker’s compensation insurance carriers have assessed general contractors premiums for coverage all subcontractors on the job site unless they furnish proof of their own policy.
Another law affecting contractors is the Payroll Limitation Law, enacted to apply a maximum payroll limitation for eligible construction classification codes for premium determination.
What other coverages might I need?
- Employment Practices Liability – if you have even one employee. This is closely tied to your workers’ comp.
- Property – no matter if you rent, lease or own your own building
- General Liability – for claims of injury or damage to property caused by you or your employees.
- Professional liability (E&O) – If you offer professional services or regularly give advice to clients.
- Cyber Insurance – If you store data, take credit cards or handle sensitive information
- Auto policy – if you have company cars or use your own car for business
- Cyber insurance – if you store data, handle sensitive information, or conduct business online
Depending on your business, you might need all or none of these. Don’t worry, we’ll examine your risks, see which coverages you really need and offer recommendations to protect your business. Plus, we’ll customize the size of your policy to the size of your business, then review your coverage every year to make sure we keep up with your growth. Anything less and we wouldn’t be doing our job.
Why should I choose HCP?
We’re entrepreneurs too and we’ll protect your interests as if they were our own. Honig Conte Porrino has worked with New York City businesses of all types and we understand the challenges you must overcome to succeed. (We should, HCP has been doing this for more than 100 years!) Whether you’re a contractor, a retailer, or healthcare provider, HCP has the expertise to help you every step of the way.
We’ll pair you with an agent who specializes in your business and can coach you on how to protect against the risks you face. In addition, many of our employees have worked with us 15, even 25 years, and make their career here. You get to work with the same person year in, year out. No need to initiate someone new to how your company works.
