Haris Ashley
Homeowners often hire handymen to perform a variety of tasks, such as housekeeping, painting, and landscaping. In most states, if a handyman is injured while working on your property, you may be held liable and responsible for their medical expenses and lost wages. Therefore, it is essential to verify that your handyman has adequate insurance coverage, including workers' compensation, before hiring them. While workers' compensation insurance is mandated by law in nearly every state, there are a few exceptions, such as Texas and Oklahoma, where it may be optional for certain self-employed handymen or small businesses. Even in these states, however, purchasing workers' compensation insurance is highly recommended to limit liability and avoid potential lawsuits.
| Characteristics | Values |
|---|---|
| Who requires workers' compensation insurance? | In the US, nearly every state requires workers' compensation insurance, except Texas and Oklahoma. |
| Who does this apply to? | Employers, including homeowners, who hire handymen or contractors. |
| What happens if you don't have workers' compensation insurance? | You may be liable if your handyman or contractor is injured while working for you. You could be responsible for their medical bills and lost wages. |
| What else could happen? | You could face significant fines for not having workers' compensation insurance. |
| What are the benefits of having workers' compensation insurance? | It can help cover the costs of injuries to your handyman or contractor, protecting you from lawsuits and financial risk. |
| How much does workers' compensation insurance cost? | Costs vary by state and the risk level of the handyman's work. Handymen can expect to pay between $5–$17+ per $100 of payroll towards premiums. |
| Are there any discounts available? | Yes, group plans through trade associations and bundling with other types of insurance can lower costs. |
| How do you know if your handyman or contractor has insurance? | Ask for a certificate of insurance and verify that the coverage applies to your specific project. |
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What You'll Learn
Homeowner liability and worker compensation
Homeowners may occasionally hire people to work in their homes, such as housekeepers, gardeners, handymen, or painters. If an employee or independent contractor is injured or injures another person while working on the homeowner's property, the homeowner may be held liable. The injured worker must fall under the definition of a "residence employee" for the homeowner's insurance policy to provide coverage. This typically includes employees of the insured or those leased by a labour-leasing firm, whose duties are related to the maintenance or use of the residence.
In some states, like Texas and Oklahoma, workers' compensation insurance is not mandatory for handymen. However, if a handyman or contractor does not have workers' compensation insurance, the homeowner's insurance policy may provide coverage for any injuries sustained by the worker. This is typically limited to specific conditions and may not cover serious injuries or permanent disabilities. Homeowners should review their insurance policies to understand their coverage limits and consider purchasing additional coverage if necessary.
It is important to note that if a homeowner is required by law to purchase workers' compensation insurance and fails to do so, their homeowners' insurance may not cover any fines, court awards, or penalties incurred. Additionally, the homeowner may be held liable if they hire an unlicensed contractor, as seen in the case of Fernandez v. Lawson in California. Therefore, it is essential for homeowners to verify the insurance and licensing of any contractors or workers they hire.
To ensure adequate protection, homeowners should consider the following:
- Review their current homeowners' insurance policy to understand the coverage limits and exclusions.
- Obtain certificates of insurance from the firm or contractor to ensure they have valid workers' compensation coverage for their employees.
- Consider purchasing additional coverage, such as an umbrella policy, to increase their liability limits and protect against potential risks.
- Comply with any applicable laws and regulations, such as OSHA rules, to avoid legal consequences.
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Worker injuries and medical expenses
Workers' compensation insurance is mandatory in nearly every state, with Texas and Oklahoma as the only exceptions. In Texas, it is optional, while in Oklahoma, it is not required for employers with one or two employees. However, even in these states, coverage is highly recommended to limit liability. The rates for this insurance vary by state and are influenced by the classification or risk level of the handyman's employees. Handymen are generally classified under code 5645, which is a moderately high-risk occupation class.
For homeowners, the situation is a bit more complex. If a worker is injured while working at a residence, the homeowner's liability may depend on various factors, including the worker's employment status and the specific state's laws. Homeowners' insurance may provide coverage in some cases, but it is essential to carefully review the policy to understand the exclusions and provisions.
In the case of Fernandez v. Lawson, a well-known example from California, Miguel Fernandez was injured while trimming a palm tree at the Lawsons' residence. Fernandez sued the homeowner, arguing that the homeowner was liable because they had hired an unlicensed contractor. The Court of Appeal ruled in favor of Fernandez, holding that a person who hires an unlicensed contractor is considered the statutory employer of the contractor and their workers. This case highlights the potential complexity of liability in these situations.
To summarize, workers' compensation insurance provides crucial coverage for worker injuries and medical expenses, and it is mandatory for employers in most states. Homeowners hiring workers should be aware of their potential liability and ensure they understand the coverage provided by their homeowners' insurance policy.
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Worker compensation insurance costs
The cost of workers' compensation insurance varies depending on several factors, and there is no standard cost. The cost is typically calculated per $100 of payroll, so businesses with larger payrolls can expect to pay higher premiums. The industry and risk level of the business also influence the cost, with higher-risk industries paying more for coverage. For example, an accountant faces a lower risk of injury than a lumberjack. The National Council on Compensation Insurance (NCCI) assigns classification codes to various professions based on their inherent risk levels, which helps insurers calculate the cost of workers' compensation. Handymen are generally classified under code 5645, which is a moderately high-risk occupation class, and can expect to pay between $5 and $17+ per $100 of payroll towards workers' compensation premiums.
The number of employees also impacts the cost, with larger staffs resulting in higher workers' compensation costs. Additionally, businesses with a history of workers' compensation claims will likely pay higher rates, as both the number and severity of past claims are considered when determining the new rate. The state in which the business operates also affects the cost, as each state has its own laws and guidelines regarding workers' compensation. For example, in Arkansas, small business owners with fewer than three employees are exempt from purchasing workers' compensation insurance.
On average, small businesses pay around $542 per year for workers' compensation insurance, with monthly costs ranging from $30 to $86. However, the national median monthly cost for new customers of one insurance provider was $80, while the average rate was $125 per month. Businesses can lower their premiums by reducing the risk of claims through employee training, implementing safety standards, and providing a safe and healthy work environment. Additionally, bundling workers' compensation insurance with other types of insurance, such as general liability insurance, can result in discounted rates.
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Worker compensation insurance compliance
In the United States, workers' compensation insurance is the oldest social insurance program, dating back to the early 20th century. It is a direct result of the public's concern about the poor and dangerous working conditions that people were forced to endure to earn a living. The insurance is based on a no-fault system, meaning an injured employee does not need to prove fault to receive benefits.
Nearly every state requires workers' compensation insurance, except Texas and Oklahoma. In Texas, it is optional for handymen, but most still purchase it to limit liability. In Oklahoma, workers' compensation insurance is not required for very small employers with one or two employees, which may include some self-employed handymen or tiny firms. However, even in these two states, coverage is highly recommended to avoid lawsuits.
Workers' compensation insurance costs vary by state and the classification or risk level of the handyman's employees. Handymen are generally classified under code 5645, a moderately high-risk occupation class, and can expect to pay between $5 and $17+ per $100 of payroll towards premiums.
Failing to provide workers' compensation insurance can result in significant fines and tremendous financial risks. For example, in Illinois, employers who do not provide this insurance may be fined up to $500 for every day of non-compliance, with a minimum fine of $10,000. Corporate officers can be held personally liable if the company fails to pay the penalty.
Homeowners who hire contractors or handymen should ensure they have adequate insurance to avoid being held responsible for any injuries or damages that may occur. Before hiring, it is essential to verify that the contractor has the correct insurance coverage and adequate limits for the job.
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Worker compensation insurance verification
In the United States, workers' compensation insurance is mandatory in all states except Texas and Oklahoma. In Texas, workers' compensation insurance is optional for handymen, while in Oklahoma, it is only optional for very small employers with one or two employees. However, even in these two states, coverage is highly recommended to limit liability and avoid lawsuits.
As a homeowner, hiring a handyman or contractor with workers' compensation insurance is essential to protect yourself from potential financial risks. If a contractor without workers' compensation insurance gets injured on your property, you could be held responsible for their medical bills and lost wages. Additionally, their insurance would not cover any damage they cause to your property or neighbouring properties.
To verify that a contractor has workers' compensation insurance, it is crucial to examine the proof of insurance provided by the contractor and ensure it aligns with your specific project. The certificate should include the correct name of the contractor, the date it was issued, and your name as the certificate holder.
For contractors in Georgia, the State Board of Workers' Compensation provides an online verification tool to confirm whether a business has workers' compensation insurance coverage. Texas also offers a similar verification process through the TXCOMP NCCI website and the Texas Department of Insurance, Division of Workers' Compensation (DWC). If you are unsure about a contractor's coverage, it is recommended to contact the relevant state agencies or the contractor directly to request up-to-date proof of insurance.
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Frequently asked questions
Homeowners are not required to have workers' compensation insurance for handymen or contractors they hire. However, if the handyman or contractor does not have their own insurance, the homeowner may be held liable for any injuries or damages caused by the worker.
If a handyman is injured while working in your home and you don't have workers' comp insurance, you may be liable for their medical bills and lost wages. You could also be sued by the handyman or their family.
Workers' comp insurance provides financial protection for handymen and their employees in the event of work-related injuries or illnesses. It covers medical expenses, lost wages, and disability payments. It also protects employers from lawsuits and ensures employees don't have to prove liability to receive benefits.
Yes, Texas and Oklahoma are the only two states where workers' comp insurance is not mandatory for handymen. However, even in these states, it is highly recommended to avoid lawsuits and limit liability.
The cost of workers' comp insurance for handymen varies by state and the risk level of the work. Handymen can expect to pay between $5 and $17+ per $100 of payroll towards workers' compensation premiums. Group plans and bundle discounts can help reduce the overall cost of insurance.
