Worker's Comp Insurance - buying decision

Sep 20, 2007

  1. Agent Jeff
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    Agent Jeff Expert

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    Let's say I want to be successful in the worker's comp business. Do I need to have the lowest price, period? Or are there other significant factors.

    Is there anyone here with experience selling worker's comp? I have no particular preference to sell to any specific type of business (in other words I have no strong natural market and I live in a big, diverse city).

    I am a very new captive P&C agent and live in California.

    What the best way to go about it? Walk into business after business and and talk and talk and ask to set up appointments until I learn where I am competitive?
     
  2. senior-advisor-indiana
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    senior-advisor-indiana Guru

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    I have a question on WC. I have a 67 yr old on a med supp. He is a sub contractor. His boss dropped WC because it was too expensive. He is making each sub contractor pick up thier own policy. DOes he even need one since he is on medicare and a med supp?
     
  3. Agent Jeff
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    Agent Jeff Expert

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    A sole proprietor with no employees would not need WC, at least not in California. For all I know this is true in all other states (I don't know). If he has any employees then he needs WC (in California).

    EDIT ====

    Looking at the following site:

    https://www.civicnet.net/apps/permits/licenserenewal/index.jsp

    I THINK, by inference, we can sorta assume that sole proprietors without employees don't need WC either in Indiana. I think your client is OK.

    But of course I'm practicing law here without a license.
     
    Last edited: Sep 21, 2007
  4. djs
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    djs Super Moderator Moderator

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    I can only speak to California. Since you used the term 'boss', the company must carry workers comp. Doesn't matter what it costs, it's part of doing business. Of course, that doesn't mean everyone carries it when they have employees, but it's a basic requirement.

    For contractors (aka, construction) it is expensive. Look at the risk.

    Agent Jeff - My opinion is that you'll have a rough time selling workers comp by itself. It has to be part of the business package. I sell it with BOP's for clients. I can round that out with their health plan, their 401K, etc.

    Workers comp, by itself is a no brainer sale. You figure out what SIC code to use, how many employees, payroll, and your done. Getting it placed can be a different story, since not every carrier will accept the risk. For instance, general contractors are very difficult to place with anything other than StateFund (in California). In general, since they just gave the same info the the agent writing their liability / business package, they will place the workers comp with that agent.

    Keep in mind that workers comp is also an audited product. At the end of the year, the carrier (perhaps you) needs to verify that the payroll was what the payroll was said upfront. Differences are billed for, and can be substantial. Clients are not always happy at that time, no matter how many times you warned them upfront.

    Dan
     
    djs, Sep 21, 2007
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  5. senior-advisor-indiana
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    Who should I refer this guy to?
     
  6. djs
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    djs Super Moderator Moderator

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    The boss or the employee... as far as I know, an employee cannot buy a workers comp policy. As an individual, especially a contractor, you can get a health policy that covers work related injuries, and is probably what the boss is thinking.

    This does leave the company on the hook for wages if someone gets hurt on the job.

    Dan
     
    djs, Sep 21, 2007
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  7. Agent Jeff
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    Agent Jeff Expert

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    DJS - would a subcontractor be considered an employee for workmen's compensation purposes? (for senior-advisor-indiana's benefit this does me no good since I can do nothing with general contractors anyway)

    Also DJS thanks for your reply concerning the WC combination with the bus. owners policy, that does give me something to think about.
     
  8. djs
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    djs Super Moderator Moderator

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    Subcontractors can be employees or independent when it comes to workers comp. It doesn't matter that they are 1099. For instance, most hairdressers are 1099 contractors, but the hair salon is required to carry workers comp on them.

    Since the term 'boss' was used, as well as the fact he dropped workers comp telling people to get their own, I skipped over the relationship factor, it was pretty clear that the requirement to carry workers comp exists. Of course, wording is everything.

    Workers comp is extremely state specific. I only work in California. Hair dressers in other states may not be considered employees when it comes to workers comp, implying that you really need to know your states views on these relationships. Talk to the underwriter, they will tell you.

    Dan
     
    djs, Sep 21, 2007
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  9. saieddie
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    saieddie Guru

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    His boss may want him to have a WC policy so that he can't come back and sue him in case of an injury. In Va., Home Depot, Lowes, etc make their sub contractors, even sole props, have proof of WC before they'll let them do any contract work for them.
     
    saieddie, Sep 21, 2007
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  10. djs
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    djs Super Moderator Moderator

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    It all depends on what the relationship is. Lowes / Home Depot / etc hire true subcontractors. The boss of that subcontractor can't tell his employee to go get his own workers comp policy, usually unless the 'employee' is a followon sub-subcontractor, licensed as a separate business. Please note that a business license is not a fool-proof way to determine the need for wc, but it's a good start.

    Dan
     
    djs, Sep 21, 2007
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