America's #1 nationally brokered Bed and Breakfast / Country Inn Insurance * Toll Free: 877-275-7235 Fax: 240-405-1450 * E-mail: inquire@premierprograms.com

UNDERSTANDING INSURANCE

For the Bed & Breakfast or Country Inn Innkeeper

Workers Compensation

Rule of Thumb: If you have employees, purchase Workers Compensation insurance.

Injuries sustained by your employee are excluded in the Liability portion of your policy.

Workers Compensation provides coverage for an employee if he is injured on the job. The policy provides medical expenses coverage, disability, life insurance and unlimited rehabilitation.

Workers Compensation is required by law, however, in many states, you have to reach a certain threshold with respect to the number of employees before the law will apply to you. Regardless of your state requirements, if an employee is injured, YOU MAY BE RESPONSIBLE.

Workers Compensation coverage protects the employer as well as the employee. Workers Comp is an "exclusive remedy" which means if an employee is injured on the job, his only means of compensation is the Workers Comp policy. In other words the employee cannot sue you for further damages (except in very rare cases where there is extreme negligence, the "exclusive remedy" clause is waived and the employer can be sued). Without a Workers Comp policy, the employee is entitled to three times the amount for which he would have been awarded under a Workers Comp policy plus he is allowed to sue the employer for damages.

Be aware, you may be responsible for injuries sustained by the employees of an independent contractor ( a Catering Firm, for example) while on your property if the independent contractor does not have workers compensation coverage for their own employees.

Do not fall into the trap of thinking your employee is an independent contractor. The IRS has established the following 20 questions to determine a worker's true status:

Can the worker hire, supervise or pay others to work for him?
Does the worker have an investment in the enterprise?
Can the worker profit or lose money from his endeavors?
Does the worker work for several clients?
Does the worker present himself to the public as self-employed?
Do you provide instructions?
Do you provide training?
Are the worker's services integrated into the general operations of your business?
Are the worker's services rendered personally?
Is there a continuing relationship between you and the worker?
Does the worker have set hours or work?
Does the worker work full-time for you?
Does the worker always work at your business location?
Do you specify the sequence of services that are to be performed?
Is the worker required to regularly furnish oral or written reports to you?
Is the worker paid by the hour or week?
Is the worker reimbursed for business expenses?
Do you provide materials needed to do the work?
Does the worker have the right to terminate his services at any time without risking breach of contract?
Do you have the right to terminate the worker's services at any time?

"No" answers to the first five questions and "yes" answers to the others indicate an employer-employee relationship. Based on the above, is your cleaning person, or your lawn care person really an independent contractor? If you have an employer-employee relationship, you need Workers Comp Insurance. If you do have an independent contractor situation, make sure to receive a bill for services rendered before you pay.

CAUTION: YOU AS AN OWNER HAVE THE OPTION OF EXCLUDING YOURSELF FROM COVERAGE. IF YOU DECIDE NOT TO CARRY WORKERS COMPENSATION COVERAGE ON YOURSELF, MAKE SURE TO CHECK WITH THE AGENT WHO IS WRITING YOUR HEALTH INSURANCE TO DETERMINE IF YOUR HEALTH INSUANCE POLICY WILL COVER WORK RELATED ACCIDENTS. SOME WILL NOT.

Workers Compensation rates vary from state to state. Some states allow the insurance companies to establish their own rates. In these states, the rates are usually lower because of competition. Other states force the insurance companies to use an established rate; in most of these states, many insurance companies will not offer Workers Comp insurance so the employer must purchase his policy from a State Agency of the Assigned Risk pool.

The Assigned Risk pool is a national pool whereby a request for a Workers Comp policy comes into the pool and is "assigned" to the next insurance company on the list. An insurance company may not be writing Workers Comp insurance in a state, but must take a policy from that state if it is assigned to them.

Back - Next - Table of Contents

Powered & Designed by