7 common misconceptions about Workers Compensation for trade contractors.

Trades like construction, plumbing, electrical, HVAC, and more are dynamic and rewarding professions. Still, they come with many risks. If you’re a contractor who owns a business, HR professional, or safety officer, you’re probably familiar with them. You may also know that for construction business owners and contractors, Workers’ Compensation insurance is essential.

Even the most careful workers can get hurt due to their actions, mistakes by others, or just random accidents. That’s why it’s important to have Workers’ Compensation insurance. For many contractors, it’s also legally required. Getting it THREE policy for business insurance is very convenient.

Workers’ Comp insurance for contractors covers medical expenses related to on-the-job injuries or illnesses and can help pay for an employee’s lost income during their recovery. It can also provide a death benefit to surviving family members in the case of an employee fatality. Nearly all companies with employees are required by the states where they operate to carry Workers’ Comp insurance.

Although contractors need  Workers’ Compensation insurance, this coverage is sometimes misunderstood. This article addresses some of the most common questions about Workers’ Comp insurance for contractors — from when and how to use it to what it costs. If you know you need Workers’ Comp, you can get a quote anytime.

Why trade contractors must address misconceptions about Workers’ Comp.

Confusion among business owners and contractors about Workers’ Comp can cause them to question whether coverage is necessary. Owners and independent contractors required to carry Workers’ Comp insurance can face fines, penalties, and even legal action if they don’t have it.

Also, employees’ misconceptions can cause them to avoid reporting injuries or filings. That reluctance can mean they end up paying for medical bills that can and should be covered. This can also hurt the business, as workers struggling with unaddressed injuries aren’t as productive as they can be. They may also be more likely to leave their jobs, creating labor challenges for the business.

Time to debunk misconceptions about Workers’ Comp for contractors.

Below we use facts to correct seven common misconceptions about Workers’ Comp for trade contractors.

Misconception #1: Workers’ Comp insurance for contractors is too expensive.

FACT: Workers’ Comp coverage is priced reasonably as part of a THREE policy, especially when you consider the huge out-of-pocket expenses that can occur if you aren’t covered and an employee sues you. There are also consequences if you’re required to carry Workers’ Comp and don’t have it. You can check your cost by getting a quote for a THREE policy that includes Workers’ Comp.

Misconception #2: Workers’ Comp is only for serious injuries.

FACT: Workers’ Comp covers a range of injuries, from minor cuts, sprains, and repetitive use issues to broken bones, occupational diseases, and other conditions. It helps employees recover from incidents quickly and get back to work.

Misconception #3: Employees shouldn’t file Workers’ Comp claims for “minor” injuries.

FACT: Workers should report injuries, even if they seem insignificant. Doing so protects their rights should an injury worsen later. For example, imagine an employee cutting their hand but not reporting the incident or seeking treatment. Over time, a severe infection develops, requiring medical treatment. Failing to report the initial injury may affect the compensation provided.

Misconception #4: Carrying Workers’ Comp makes you the target of fraudulent claims.

FACT: While it’s true that fraud occurs, it’s uncommon. Processes for investigating and verifying claims help prevent fraud. Businesses can also reduce the risk of fraud by having clear reporting procedures and ensuring employees understand them.

Misconception #5: Reporting an injury or filing a Workers’ Comp claim can cost a worker their job.

FACT: Federal and most state laws prohibit retaliation of any kind against employees who file Workers’ Comp insurance claims. There are many ways to report complaints against employers related to Workers’ Comp claims. Check with authorities in your state for details.

Misconception #6: Workers’ Comp doesn’t cover incidents if the employee is at fault.

FACT: Workers’ Comp is a “no-fault” system. That means workers are usually eligible for benefits if incidents occur at work. The specifics are determined by state workers compensation law, and the Workers Compensation policy pays what the law requires.

Misconception #7: Workers’ Comp only covers medical bills and a portion of lost wages.

FACT: Workers’ Comp can cover other expenses, like vocational rehabilitation (training for a different job if the employee can’t return to their previous one) and disability (partial, total, temporary, or permanent). As noted above, Workers’ Comp can also provide a death benefit to family members.

Who needs to understand how workers’ comp protects contractors?

All employees and business owners in the trades should understand the requirements for and benefits of contractor workers’ comp. Are you the HR coordinator at a mid-sized construction company or contracting business? If so, you’re likely tasked with things like understanding insurance compliance requirements, ensuring workers’ compensation claims are handled effectively, and promoting a culture of safety.

If you’re the safety officer at a larger construction company or contracting business, you probably focus on risk mitigation and the integration of safety initiatives and workers’ compensation insurance into your company's overall business strategy.

Ultimately, whatever your role is, if purchasing or using contractor Workers’ Comp is on your to-do list, THREE can be your business insurance partner.

Unclear about Workers’ Comp coverage for your trade business? We can help.

Workers’ Compensation insurance is crucial (and typically required) for businesses with employees. It’s especially important in the trades, where there is a significant risk of injuries. Getting coverage as part of a comprehensive policy from THREE makes it easy to protect your business from those risks.

If you have questions about contractor Workers’ Comp coverage - before or after purchasing your THREE policy - our small business advisors are happy to answer them. Contact us at 1-800-507-4495, Mon.–Fri. 8am–9pm ET.