The 12 Work Comp Questions Clients Ask
If the only thing you ever give your clients is a bill, that's all they remember about you. Give them something they can use and you'll be seen as a source of information they cannot be without.
Earlier this year Insurance Journal and the Academy of Insurance introduced a new opportunity for you to give your clients useful information, something they will use often - and think of you when they do. It's the book, "Answers to 12 of the Most Commonly Asked Workers' Compensation Questions." The first question and answer found in the book is:
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Q1. Who am I responsible for covering under my workers' compensation policy?
A. You are responsible for protecting and providing workers' compensation benefits to three types of individuals: Direct employees; employees of uninsured subcontractors; and "defacto employees."
| | 1. Direct employees. An "employee" is a person hired to perform certain services or tasks for particular wages or salary under the direct control of another. Employees are generally hired to perform a specific job usual and customary to the employer's (hiring person's) business operation. 2. Employees of uninsured subcontractors. Forty-four states and the District of Columbia statutorily require that the general contractor provide workers' compensation benefits to the employees of an uninsured subcontractor (ask your agent if this applies to you). General contractor/subcontractor relationships are not limited to the construction industry. A general contractor/subcontractor relationship is created when there are three parties involved: 1) a principal/owner hires an 2) independent contractor to complete the work; and the independent contractor hires a 3) subcontractor to perform some part of the work. When work is contracted to a third party, the "independent contractor" becomes a "general contractor." 3. DeFacto employees. Just because you call someone an "independent contractor" does not necessarily make it so. Even if the individual is an "independent contractor" according to the IRS, they may still be considered an "employee-in-fact" under workers' compensation guidelines. These are called "defacto employees." Four major "tests" can be applied to decide whether a particular worker is an "independent contractor" or an "employee-in-fact" (defacto employee) under workers' compensation. Although not an exhaustive list, the four major tests are: | | a. Do you (the employer/contracting party) control the worker's ways and means? Do you tell him/her what time to show up for work; when to go to lunch; when to go home? Further, do you tell the worker how to do the job? All of this indicates control, and control is a key feature of an employer/employee relationship. True independent contractors show up when they want; leave when they desire and work according to acceptable standards of quality. In essence, the contracting party has little control and provides limited direction.
b. Are the tools and materials supplied by you? True independent contractors supply their own tools and generally supply the materials necessary to perform their duties (nails, glue, etc.) and at their own expense (as part of the contract price). If you (the "contacting" party) provide all this, you are asserting control and again look like an employer.
c. Does the "independent contractor" work for anyone else? True independent contractors work for many principals and general contractors. If this is not the case, then this individual is a "defacto employee" (employee-in-fact) regardless of what they are called or how they are paid.
d. Does the "independent contractor" carry his own insurance? If not, then it is very likely he/she is an "employee-in-fact" under workers' compensation laws. | |
And that's just the beginning of the information found in this book.
The remaining 11 questions are:
- Which states should be specifically listed as Primary states (found in section "3.A.") in the workers' compensation policy?
- Which states should be specifically listed as secondary or "Other" states (listed in section "3.C.") in the workers' compensation policy?
- What injuries are covered under workers' compensation?
- When is a sickness/disease covered under workers' compensation?
- What types of injuries are covered by the Employers' Liability section of the policy (known as Coverage Part II)?
- What is a premium audit, why is it necessary, how are employees/workers classed and what are the possible results?
- What should I do to prepare for and ensure the best possible audit process and outcome?
- What information do I need to prepare for the audit?
- What pay/remuneration is INCLUDED within audited payroll?
- What pay/remuneration is EXCLUDED from audited payroll?
- What should I do following an injury to a worker?
Remember, the book is written so that your client or prospect understands the information.
Buy these books in bulk and pass them out to all your clients and prospects. You can even customize the books with your logo so that you are always on your clients mind - and your prospect's mind.
If the only thing you ever give your clients is a bill, that's all they remember about you. Give them something they can use and you'll be seen as a source of information they cannot be without.
Order today and take advantage of special bulk-rate pricing for your agency.
Until next time,
Christopher J. Boggs, CPCU, ARM, ALCM, LPCS, AAI, APA, CWCA, CRIS, AINS
Director of Education
Academy of Insurance
cboggs@ijacademy.com 
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