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  1. #1
    Join Date
    Feb 2013
    Location
    The mountains of VA
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    Question for fellow sole proprietors - workers comp ins

    While I've been doing this work for years and years working as an employee, I only recently began my own business, and to this day, I am still learning the "business end" of it. You know, the part you never see working in the field under an employer, the part the administration staff handles.

    So I have years of experience repairing equipment and houses, but I'm basically learning as I go along in regards to licensing and insurance.

    I'm wondering if I should get workers compensation insurance on myself. I've heard some say this is a good idea, others won't even work with a contractor unless they have it, and yet others don't seem to mind.

    I have general liability insurance to cover my work, but I've come to find out that's not the same.

    Apparently, if I'm working on a freezer in a restaurant, and fall off the ladder, the restaurant may be liable for my injury. I didn't know this. Personally, I'd never sue a customer unless it was due to their gross negligence.

    As I grow my business I'm looking to give my customers peace of mind in knowing that when they contract me to work on a project or repair, that they have practically no worries in my abilities to perform my task safely, and with little to no liability on their part.

    FYI: I know that Virginia law DOES NOT require workers compensation insurance for up to three employees. So this isn't a matter of law. It is more a matter of peace of mind for my customers.

    However when I have spoken to insurance agents about this in the past, they more/less told me I don't need this coverage.

    If I get this, would anyone care to share about how much it cost? I've heard it can be several thousand dollars per year! If that's the case then I don't know what I'd do. Such a premium would sap up most of my profits.

    No customers have mentioned it yet, but I'm just trying to think ahead and look into the future.

    Any advise?

  2. #2
    Join Date
    Dec 2005
    Location
    California/Nevada
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    3,607
    my non-professional 2 cents...

    workman's comp doesn't protect anyone from a lawsuit.

    if you suffer a serious injury, workman's comp probably won't pay you what you need.
    you have to decide if you want the "benefits" from paying into workman's comp and Social Security.

    if you're sweating over a couple of thousand per year, you proabably need to raise your prices

  3. #3
    Join Date
    Aug 2001
    Location
    forney texas
    Posts
    17,890
    As someone who has been through worker's comp as an employee, I can tell you that having it will protect you from a lawsuit. At least in Texas. If you want to hear more about it you can contact me through a private message because the experience has left a bad taste in my mouth. I would recommend you download the complete WC documents for the State in which you live and read it, over and over. You'll learn how it protects you as an owner or from an employee who got hurt and is looking for compensation from your business

  4. #4
    Join Date
    Feb 2013
    Location
    The mountains of VA
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    Quote Originally Posted by wolfstrike View Post
    my non-professional 2 cents...
    if you suffer a serious injury, workman's comp probably won't pay you what you need.
    you have to decide if you want the "benefits" from paying into workman's comp and Social Security.
    I thought about that last night. Because even workers comp has its limitations. However I have read that Virginia law states that any person covered under workers comp can not go after their employer after for additional funds, but is bound to the workers comp policy payouts.

    Quote Originally Posted by acmanko
    You'll learn how it protects you as an owner or from an employee who got hurt and is looking for compensation from your business
    Sorry, I forgot to mention I have no employees, I just work for myself.

    I think it really comes down to what is considered an employee. According to the file I read (linked below) In most cases, an "independent contractor" is not considered an employee. I wonder if this means that I couldn't legally go after a customer for an injury. If this is the case then the customer should have nothing to worry about. According to the file, there are exemptions to who is considered an employee, I will list the top two:

    Domestic workers (hired primarily for the performance of household chores, home maintenance, or the care, comfort, and convenience of household members)
    I figure this mostly applies to babysitters. However the words "home maintenance" struck me, as practically everything I do in the home could be considered "home maintenance".

    Casual workers (who do not perform work in the usual course of the employer’s trade, business, occupation, or profession)
    This one may apply to me more so when I'm working in a restaurant. As a service technician, I am not part of the "employers" (the restaurant) usual course of trade as I am not preparing food. It seems to me this would only be an issue if I were working as a sub contractor for another contractor in the same trade, not something I have ran into yet.

    In conclusion, I think on Monday I will ride by the insurance office where I have my general liability policy and at least see if I can get an idea on a price. Two thousands dollars a year sapping up "all" of my profits is an exaggeration I admit. However business is only recently taking off, I'm still having to watch every penny going in and out, and at this phase $150-$250 per month is nothing to sneeze at. Especially for something that so far nobody has asked for, and I'm not even sure I need.

    Personally I feel that anything much higher than what I pay for my general liability policy for a sole proprietors would be a rip off. Consider this, if I got hurt doing a job for someone, naturally I WOULDN'T file a comp claim against my own policy because my rates would just go up! I'd simply go to the doctor, not tell them how it happened, and just use my own personal insurance. My health insurance kicks in a 100% at $3500, so do I spend $3500 per year on a workers comp plan that has limits and only covers me for work related issues? Or do I just use my own insurance at a $3500 deductible with 0% co insurance after $3500 with no limit?

    Next question: Even if I were to get a workers comp policy on myself, I see it is based on payroll. Well, I don't get a regular "paycheck". I get paid when people pay their invoices. My income changes call to call based on how long something takes, how much mark up I can make on parts and supplies, and other factors. My annual income is determined by the profit/loss figures on schedule C. So from what source would they base the premium on such a policy?

    http://vwc.state.va.us/vwc-portlet-c...yers_guide.pdf
    Last edited by moon_shadow; 02-23-2013 at 12:36 PM. Reason: I forgot to add the link

  5. #5
    Join Date
    Feb 2013
    Location
    The mountains of VA
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    27
    I would also like to mention that I have been working since I was 16 and I'm 32 now, and in all that time I have never had to file a comp claim. In fact, in all my life I have never been to the ER for any reason what so ever.

    (knocks on wood)

  6. #6
    Join Date
    Jun 2006
    Location
    Richmond, VA
    Posts
    2,827
    Quote Originally Posted by moon_shadow View Post
    I would also like to mention that I have been working since I was 16 and I'm 32 now, and in all that time I have never had to file a comp claim. In fact, in all my life I have never been to the ER for any reason what so ever.

    (knocks on wood)
    Excellent post. However....I was also indestructible when I was only 32...didn't care about health insurance or anything like that because I grew up in a household that my father had his own business...back then, you could work and afford to pay a doctor and not have to have "insurance"! and I also mean you could go to a hospital for a week and NOT NEED INSURANCE.

    You seem to have a good grasp of what it takes. Get your quotes for WC and then evaluate it vs. what you already know. In VA, they also look at an subs you use that don't have WC insurance as counting toward your 3 employees. Some commercial customers require WC and you end up paying for it anyway.

    Also, there are some misconceptions in your long post.....If you get hurt and have your own business...and you have private insurance vs. workers comp...you will have a fight on your hands....AS you private policy will say YOUGOT HURT ON the JOB, so we are not paying go after you WC carrier.....
    Give a man a fish, he will eat for a day. Teach a man to fish, he will eat for a lifetime.

    Give a man a capacitor, doesn't know what to do. Teach a man to install it, now he knows everything.

  7. #7
    Join Date
    Feb 2013
    Location
    The mountains of VA
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    27
    Quote Originally Posted by beshvac View Post
    Excellent post. However....I was also indestructible when I was only 32...didn't care about health insurance or anything like that because I grew up in a household that my father had his own business...back then, you could work and afford to pay a doctor and not have to have "insurance"! and I also mean you could go to a hospital for a week and NOT NEED INSURANCE.

    You seem to have a good grasp of what it takes. Get your quotes for WC and then evaluate it vs. what you already know. In VA, they also look at an subs you use that don't have WC insurance as counting toward your 3 employees. Some commercial customers require WC and you end up paying for it anyway.

    Also, there are some misconceptions in your long post.....If you get hurt and have your own business...and you have private insurance vs. workers comp...you will have a fight on your hands....AS you private policy will say YOUGOT HURT ON the JOB, so we are not paying go after you WC carrier.....
    Yeah, that's what I'll do. When I took out my general liability policy the agent told me if I needed more, the insurance company would have to issue something like an "umbrella" policy. Which I'm assuming should just about include everything I need to do some serious business. Currently I'm insured at one million general liability. However I've been told that many chain restaurants want at lest three million and workers comp insurance.

    To date my customers have been mostly mom and pops. In order to justify the extra premium of several thousand dollars per year I'd like to pick up at least four or five steady chain customers. For instance I've been told by another contractor friend that Applebees requires such coverage. I don't know about Ruby Tuesday, but my understanding is Ruby Tuesday has entered into a contract with Hobart Corp that they MUST use Hobart for their repairs. Then again, mom and pop usually pay when the job is invoiced. Chains require a month or two.

    I have been trying to snag a county school system. The extra coverage could be a nice feather in my cap if we ever sit down and negotiate.

    I received quite a bit back on taxes this year, if I can afford it, I'll give it a shot and market like hell to grow the business enough to pay for the continued premium.

    BTW: On an earlier post it was mentioned I should raise my rates. As of January 1 2013 they are raised to $60 per hour for restaurant work, which is about in line with other one to two man outfits in this region.

  8. #8
    Join Date
    Jan 2012
    Location
    Broomall, PA
    Posts
    380
    My non-legal opinion.....What type of ownership do you have with your business.. Sole Proprietory, S-Corp, C-Corp, or LLC?
    If you're a Sole Member LLC, you can't get Workers' Comp. Everytime I have to fill out something....and there's alot of 'somethings', and they ask for/require workers comp, I write in "Sole-Member LLC", and thats all they need. Of course you have to be a "Sole-Member LLC".
    Last edited by STEVEusaPA; 02-23-2013 at 04:48 PM. Reason: typos

  9. #9
    Join Date
    Aug 2009
    Location
    Maine
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    3,040
    My thoughts would be to spend a few dollars and ask a lawyer.

  10. #10
    Join Date
    Feb 2013
    Location
    The mountains of VA
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    27
    Quote Originally Posted by STEVEusaPA View Post
    My non-legal opinion.....What type of ownership do you have with your business.. Sole Proprietory, S-Corp, C-Corp, or LLC?
    If you're a Sole Member LLC, you can't get Workers' Comp. Everytime I have to fill out something....and there's alot of 'somethings', and they ask for/require workers comp, I write in "Sole-Member LLC", and thats all they need. Of course you have to be a "Sole-Member LLC".
    I operate as a self employed (with no employees) sole proprietorship. (not an LLC) I recall one insurance agent telling me that I couldn't obtain workers comp on myself, however he was the same agent I use for auto and his business wasn't really business insurance, rather home owners and auto so he really didn't know.

    I took out my general liability police with a local agent who brokers for Erie Insurance Company. I am eager to speak with her on Monday in regards to all of this and see what she suggest. If she tells me it's not necessary, I will ask her as to "why" so that I have something to tell my customers should they ask.

    All told if it doesn't an arm and a leg and require a first born for collateral, I would probably give it a go just to increase my market a bit. If it is enormously expensive I'd probably just stick with the status quo for now as it is trickling in little bits of money here and there. When I started this business I basically sunk my entire 401K into it, only to find I made a lot of purchases that were utterly a waste of money. I'm trying to avoid making the same mistake twice.
    The important thing is I do have the general liability, which is a "must have" for a sole proprietor, as with such a business structure, all of your assets, business AND personal are on the line.

    I will report back here with my findings for future reference.

  11. #11
    Join Date
    Jan 2012
    Location
    Broomall, PA
    Posts
    380
    just a follow up regarding Workers Comp....adding on to my previous post. I did 'have to' get it for a school district job. They're lawyer wouldnt take no (or legal logic) for an answer. So my ins. co. gave me a policy for $100.00...both of us realizing its completely useless, but hey I got the job and made some dough. Same district made me get a rider for on-site fueling of diesel school buses, to cover spilling a specific chemical that is not in diesel fuel. The ins. co gave me that rider for free.....

  12. #12
    Join Date
    Aug 2001
    Location
    forney texas
    Posts
    17,890
    There are examples of needing the coverage off of a work site. You could be in traffic accident while in your work vehicle or have an accident at your shop

  13. #13
    Join Date
    Jun 2004
    Location
    Eugene, Oregon
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    1,018
    Quote Originally Posted by moon_shadow View Post
    When I started this business I basically sunk my entire 401K into it, only to find I made a lot of purchases that were utterly a waste of money. I'm trying to avoid making the same mistake twice.
    I'm curious, what purchases were a waste of money?
    "The bitterness of poor quality remains long after the sweetness of low price is forgotten". --Benjamin Franklin
    "Don't argue with an idiot, they will drag you down to their level and beat you with experience". --Mark Twain
    http://www.campbellmechanical.com

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