Workers’ Compensation in the Construction Industry

Workers’ compensation is essential in the construction industry for companies in New Jersey. Naturally, you may have numerous questions relating to this topic, so we will aim to answer as many of them as possible throughout this guide. By the end, you should have a more thorough understanding of what worker’s compensation is, why it’s important, and what affects the premiums.

What Is Worker’s Compensation?

Worker’s compensation is a type of insurance that offers coverage in the event of employees injuring themselves during employment. As a result, it can prevent instances where employees sue the employer for compensation, as it provides benefits for them. This can include paying for medical bills, lost wages, etc.

In New Jersey, the current law is that all New Jersey employers – who aren’t covered by Federal programs – must have some form of worker’s compensation in place. It’s seen as a way of protecting both the employer and the employee if workplace incidents happen.

Why Is Workers’ Compensation Vital for the Construction Industry?

While the law enforces all companies to have worker’s comp in NJ, it is even more important for construction business owners. When you consider the function and purpose of this insurance, you instantly understand why it’s extremely beneficial in this industry.

The construction industry is one of the most dangerous and risk-heavy sectors in the world. Consider all the equipment and machinery that’s used every day and the potential hazards you see when operating them. Then, factor in all the other elements of a construction site, and you very quickly have a long list of risks to deal with every day. The simple fact is that a construction company will have more chances of accidents happening than almost any other business in any other industry.

Consequently, the need for coverage is greater than anywhere else. By having worker’s compensation, construction companies have a little bit of a safety net in place for the inevitable accidents that will happen. Even with the most stringent health & safety measures in place they will happen. It’s not a poor reflection on your company, but more a reflection of how dangerous the industry is!

What are the Benefits of Worker’s Comp for Construction Businesses?

By now, we’ve established that you need to have this insurance, regardless of how you feel about it. As a result, many construction business owners are somewhat annoyed at having to pay for it. They see it as an extra cost that they’re forced to pay, so perhaps it will make you see things in a different light when you learn the benefits of having worker’s compensation for your construction business.

Protects Your Business From Financial Hardship

Worker’s comp works similarly to all other insurances in that it protects your business from serious financial hardships. What would happen if your company didn’t have this coverage, and an employee was injured on-site? Legally, they have more than enough ammunition to sue for a lot of money. The fact that you’re breaking the law by not having this mandatory insurance is one thing, let alone the compensation claims they can make because of their injuries.

When you calculate the costs of having worker’s compensation vs. the costs of not having it, you realize it is a much better financial move. The benefits provided to your employees ensure that they have no reason to go out and sue you. Also, you’re almost protected from any legal trouble because you can prove that you do have the insurance in place.

Stops You From Damaging Your Reputation

Similarly, lawsuits are always awful for your reputation. Construction workers injure themselves all the time, but you hardly ever hear about it. This is because the companies have worker’s comp, so their wages are covered, and medical bills paid for. It doesn’t become a news story as the employee is happily recovering without worrying about their financial situation.

Therefore, your reputation remains intact. However, if you didn’t have worker’s comp, and they filed a lawsuit, it would make the local news. More people would hear of the incident and your construction company would be painted in a poor light. You could end up with a reputation that’s impossible to repair. Thus, any future work opportunities will be few and far between.

How Much Does Worker’s Compensation Cost?

Like all insurance types, worker’s compensation varies in costs depending on numerous factors. However, we can say that it tends to be more expensive for construction companies, purely because it presents a higher risk for the insurer. There are more chances of accidents happening on construction sites, therefore more chances of having to pay compensation through insurance.

Nevertheless, here are some main factors that influence your premium:

• Working with heavy equipment or dangerous tools can increase risks, thus raising your premium
• Working at heights of 15 foot and above will increase the premium because your business presents a greater risk
• The specific type of work you do can either increase or decrease the premium, depending on how risky it is

Regarding that last point, most construction businesses will have different work class codes that explain the roles of the employees. This includes:

• Masonry workers
• Plumbers
• Carpenters
• Electricians
• Other specialty traders

When requesting a quote for worker’s compensation, you need to classify all of your employees according to their work class codes. This is because it can have a tremendous impact on your premium – for instance, if you have lots of electricians, the premium can go up as working with electricity is a high-risk job.

How Do You Get Worker’s Compensation in New Jersey?

Keller Insurance Services is one of the leading insurance agencies/brokers in the New Jersey area. If you’re looking to acquire worker’s compensation throughout NJ, please contact us today. You can send us a message via our website, or contact us directly via telephone to talk about your options.