A Quick Guide to Workers’ Compensation Insurance for the Construction Industry

Construction Workers’ Compensation insurance is a crucial investment for contractors and construction companies, given the industry’s high rate of workplace injury. Workers’ Compensation coverage is mandatory for contractors in almost every state; ensuring protection for these businesses and their employees. This coverage helps to protect businesses from liability resulting from workplace injuries and may reduce the risk of a significant financial loss if an employee is harmed while performing work-related duties.

Workers’ Compensation Protects Employees and Profitability

Roofers falling from heights or a craftsperson getting electrocuted are only two of the many workplace accidents involving construction workers. The financial cost of such incidents, including hefty medical bills and time out of work, can hurt a business’s profitability. Workers’ Compensation insurance typically covers these costs, minimizing the financial burden that workplace injuries or illnesses place on construction companies.

The following expenses may be covered by Workers’ Compensation for work-related injuries or illness:

  • Immediate costs of treatment, including hospitalization and emergency room expenses
  • Physical therapy and other necessary ongoing medical treatment
  • Partial lost wages following the loss of capacity to work
  • Compensation for permanent injuries and/or retraining costs

What is the Cost of Construction Workers’ Compensation Insurance?

The main factors that determine Workers’ Compensation insurance costs are:

  • Payroll (per each $100 spent on remuneration)
  • Type of work or classification rate (CR)
  • Experience modification rate (EMR) – a multiplier the company obtains based on their past claim’s history
  • Workers’ Comp premium =  (CR x EMR/100) X EMR

What are the State Requirements for Construction Workers’ Compensation?

Specifics of Workers’ Compensation laws vary by state, and due to their higher risk of workplace injury construction companies may face stricter requirements than businesses in other industries. While in some states, construction companies must carry Workers’ Compensation insurance for both full-time and part-time workers, others require only businesses with three or more employees to carry it. It is critical to know your state rules as there are strict penalties for not securing Workers’ Compensation insurance; for example, the state could shut down a business that has not secured coverage.

What about independent contractors or those with sole proprietorships? They can still benefit from the financial protection of Workers’ Comp insurance even if their state law doesn’t require it.

Reduce Coverage Costs with Risk Management

Every paid claim for at-work injury contributes to an increase in premium and business costs. Keeping construction sites safe can reduce workplace incidents and lower coverage costs. Proper risk management for this industry includes preventive measures such as:

  • Providing safety training
  • Reducing workplace hazards
  • Providing employees with appropriate safety equipment and protective gear like gloves and safety glasses

With the proper risk management measures and Workers’ Compensation coverage in place, construction companies will increase their chances of keeping employees safe while protecting their bottom line. For more information about the PMC construction Workers’ Compensation program contact our team at PMC Insurance Group today!

By PMC Insurance Group

Since 1996, PMC Insurance Group has worked to help independent agents grow their client base by offering workers' compensation solutions for a wide array of businesses. As one of the most distinguished workers' compensation wholesalers in the country, we have the tools and resources to help you create coverage programs for small businesses and large accounts.