Workers’ Compensation For Contractors and Trades

Workers’ Compensation For Contractors and Trades

March 15, 2023

Arizona requires any company that hires employees to have workers’ compensation insurance. That means that whether you are a contractor or looking to hire one, you need to know how workers’ compensation insurance for contractors works.

What Is Workers’ Compensation Insurance 

As an employer, we know that keeping your employees safe on the job is one of your top priorities. But, when a worker does get injured on the job, workers’ compensation insurance will protect them and keep your business’s finances safe.

Workers’ compensation insurance helps your employees get back to work faster and more safely. It may also protect you from being sued by employees or deemed liable by a court. 

Do Subcontractors Need Workers’ Compensation Insurance?

As a subcontractor, you’re often hired by another company to perform a job as a professional. Rather than a full-time employee, you act as an independent contractor. Still, the rule is pretty easy to follow for subcontractors regarding workers’ compensation – and any business in Arizona. If you hire more than one employee (including yourself), you must have workers’ compensation insurance

Although it may sound like a luxury, it is the law. It’ll also shield your business in the event of a lawsuit or an unfortuante situation. In the end, having workers’ compensation is a win for everyone. 

What Happens If A Subcontractor Does Not Have Insurance?

When you’re hiring a subcontractor, you do not need to have workers’ compensation insurance for them. However, you may want to ensure you hire a subcontractor with their own workers’ compensation insurance. According to the State of Arizona, “there are often disputes over whether a worker is an employee or an independent contractor.” These disputes can lead to lawsuits, so it’s often better to be safe than sorry.  Additionally, your work comp carrier may require that you prove that your sub contractors have work comp.  If you aren’t able to provide proof that the sub has work comp, then the carrier may charge you additional premium at the end of the policy period.

What Is The Difference Between A Subcontractor And An Independent Contractor?

Although the terms “subcontractor” and “independent contractor” are often used interchangeably, their meanings are quite different:

  • A subcontractor is someone typically hired by a general contractor to perform a specific job. For example, a general construction contractor may subcontract a roofer to install the roof on a new home. Unlike an independent contractor, a subcontractor has no relationship with the entity that owns the larger project – only with the general contractor that hired them. 
  • An independent contractor is typically a self-employed person or business hired directly by a company to provide them with goods or services. Independent contractors establish rates with their clients and typically work off of written or verbal agreements. For example, you may hire someone to clean your home every two weeks in exchange for an agreed-upon amount. 

The difference between an independent contractor and a subcontractor can seem simple when the jobs are straightforward. However, the lines get blurred as projects become lengthier and more complex. That’s why making sure you have the proper form of workers’ compensation insurance is crucial to the long-term success of your business and its employees.  

Get A Free Estimate On Workers’ Compensation Insurance

At TruView Insurance Group, we specialize in helping local businesses find coverage that suits their needs and budget. Our policies are tailored to you – after all, there’s no such thing as a one-size-fits-all insurance policy when it comes to your business.

Our insurance experts work for you, and they understand how to find a workers’ compensation plan that covers everything you need and nothing you don’t. Contact us today for a free estimate, and we'll help you protect what matters most.