Tom's Blog
Being a business owner comes with a lot of responsibilities! Sometimes when you are running a business and dealing with insurance protection, there may seem like there are no clear defining lines as to who fits where. What if you are a contractor or even a subcontractor and get hurt on the job? Is there a clear way to know who covers what under whose policy? Find out about N.C. Workers comp insurance regarding being a contractor versus a subcontractor.
What is the Difference Between a General Contractor and a Subcontractor?
The business owner typically “contracts” a general contractor to evaluate a job, bid on the construction job, evaluate the estimated cost of what it will take to complete the job, and in that, estimates the money he will have to pay to his “subcontractors.”
The subcontractors are hired from the general contractors for the more specialized jobs that the contractors are unable to do, such as plumbing, electrical or drywall. Since they are typically more specialized in their jobs, they are hired contractually with very specific job duties. The contractor, at the completion of the job, will be paid and will then pay the subcontractor(s) at that time.
For a general contractor relationship to exist, there must be a chain of people, beginning with the principal (business owner), then the general contractor, down to the subcontractor.
As a General Contractor, Are You Required to Have Workers Compensation Insurance?
This answer is quite simple. If you have 3 or more employees working for you, inclusive of you, the North Carolina law mandates that you carry workers compensation insurance. Some instances may require that you carry this coverage, regardless of the number of employees, depending on requirements for obtaining a builder’s permit. It may be wise to contact the builder’s permit licensing department for further information regarding this.
If You Are a General Contractor, Are You Responsible for Covering Subcontractors Under a Workers Comp Policy?
Subcontractors are legally required to have their own workers compensation insurance and proof of that insurance is required at the time of contractual agreement. However, saying you have proof of insurance and actually having workers comp insurance may be two different things.
Sometimes the subcontractor may state that he is amply covered for workers comp but doesn’t have the actual proof on hand. The contractor may let that slide if there is time pressure to begin a job, but the real problem occurs when an accident happens and injuries are sustained. Suddenly, that proof needs to get proven!
What if the Subcontractor Gets Injured and the General Contractor THEN Finds Out the Subcontractor Was NOT in Compliance with the N.C. Workers Compensation Act?
Subcontractors are contractually required to carry workers compensation insurance; however if the subcontractor or any of the subcontractor’s employees gets injured during the scope of the job, and does not have workers comp coverage, then the general contractor could be held statutorily responsible for injuries/illness to the subcontractor or his employees.
Accidents occur on jobs ALL THE TIME, no matter how careful you are. The North Carolina workers compensation laws surrounding the relationship between general contractors and subcontractors are designed to provide protection for any injured worker. It is so important for general contractors to “contractually” require any subcontractor to provide proof of workers comp coverage to avoid being held financially responsible for somebody’s injuries.
If you have any questions regarding the North Carolina workers compensation laws, rules, or regulations, contact us at 866-869-3335 so that we can assist you!
