Liability Insurance as sub-contractor

Jul 14, 2008

  1. bdkjose
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    bdkjose New Member

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    Can someone please point in the right direction as too where to get information about liability insurance.My employer is telling me that I must pay for my own liability insurance. I will not be an employee, i am sub contracted by them. I've heard its about $700 or $800 a year for this insurance and I dont understand why I should pay for this.
     
    bdkjose, Jul 14, 2008
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  2. bdkjose
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    bdkjose New Member

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    By the way ... I live in FL and they are also making me sign and turn in a "Notice of Election To Be Exempt".

    I just don't get all this.
     
    bdkjose, Jul 14, 2008
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  3. xrac
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    xrac Guru

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    They do not want to be responsible for paying FICA, Medicare, Workman's Compensation and Unemployment taxes on you. Whether you are or are not an employee or are a subcontractor is probably debateable and they are making you sign the form and get liability as a cover their behind type practice in case they ever get audited. Also if they make you carry liability it helps them reduce their own costs and exposure. You are probably involved in some type of contracting/construction type work. Am I correct? What exactly do you do?
     
    xrac, Jul 14, 2008
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  4. bdkjose
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    bdkjose New Member

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    yeap ... i work in the audio/video/satellite biz. So let me get this right ... in order for them to subcontract someone, that someone (or company) needs to have liability ins.? I thought it was that in order to contract anyone for any type of work, they need to be licensed.
     
    bdkjose, Jul 14, 2008
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  5. xrac
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    xrac Guru

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    Licensing can be an issue but that is either a state or local municipality issue. Your status as to whether you are a contractor or an employee is an IRS issue. The bottom line with the people you are working with is they are trying to go the cheap route.

    If they treat you as a subcontractor it will probably save them 15-25% in payroll costs verus treating you as an employee. If they pay you as a subcontractor then you are responsible for FICA taxes on that, Medicare Taxes, your own workman's compensation coverage (say you get hurt), etc. For every $1 paid in wages you probably have to make $1.20 as a subcontractor to be at the same money and that is because of the tax issues.

    Here is a link to the IRS site on the issue:

    Who Is Considered Self-Employed?

    Here is my advice to you. If you went to work for them thinking it was a job and you are an employee you need to either find someplace else to work or see if you can up what they are paying you.
     
    xrac, Jul 15, 2008
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  6. patch36
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    patch36 Guru

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    If you want the 'job', you are going to be an independent contractor. If you mess up someones house, or cause damage, your liability insurance pays. You are probably paid by the job and have some flexibility about when you work.

    Shop around for liability insurance. Most P&C folks can offer it. It should be around $500, or...you can rock the boat and look for work elsewhere.
     
    patch36, Jul 15, 2008
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