What is Contractor's Workers Compensation Insurance?

Building construction contractors have to employ large number of workers both skilled and unskilled to do the variety of jobs that the construction work entails. These workers may be insured, uninsured or under insured. In the unfortunate event of any worker getting hurt or injured whether severely or fatally, the contractor becomes liable to provide him the compensation according to his entitlement as prescribed by the laws of the state of California. The benefits that the contractor may have to pay may include wage loss benefits, regular periodic payments, medical rehabilitation of the occupationally disabled employees, death and survivor payments.

It is, therefore, imperative for those new to contracting, or those contractors who are expanding their existing business or shifting it to the state of California to understand the workers compensation and the insurance coverage laws.

If a contractor doing business in California does not carry workers compensation coverage, he is liable to criminal prosecution and a fine up to $100,000 under the California Labor Code, Section 3700. A contractor is not allowed to conduct his business unless he provides the proof of valid workers compensation insurance guarantees.

It must be borne in mind that generally workers compensation is mandatory for all the employers who have one or more than one employees working under them irrespective of the fact whether they are part timers, full timers or even if they are the members of their family. The employers who provide coverage to their employees are themselves protected against the lawsuits of the injured workers.

In case you, as a contractor, are not covered by the workers’ compensation laws, and if your employees get injured, the state will pay all the benefits to protect their health and income that are entitled to them from the Uninsured Employers Fund and recover all the costs from you by using the same methods that are used to recover the tax arrears, child support and student loans. The state can put a lien on your home and your contractor's license is cancelled automatically immediately. The government then attaches all your assets even if you hold them in other countries. You can be sued in the courts by the workers for your negligence.

Workers' compensation protects the health and income of workers who get injured on the job. It also limits the employer's liability for lawsuits. If you cannot pay the salaries to your employees and also cannot pay them the compensation when they are injured, you have no right to be in business.
It is, therefore, advisable for the contractors to verify the credentials of their workers’ compensation carriers. They should possess the certificate from the California Department of Insurance. The California Department of Insurance has a website http://www.insurance.ca.gov. You can check whether or not the compensation carrier is licensed or not by entering its name or its license number in the relevant field in the website.

If as a contractor you are considering to avail the services of an employee from a leasing company or a labor contractor, make sure that the service provider must have the workers’ compensation coverage under its own policy. Get the services of some knowledgeable professional to check the compensation coverage documents of the service providing company.