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. 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 used daily and the potential hazards you see when operating them. Then, factor in all the other elements of a construction site, and you quickly have a long list of risks to deal with daily. 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, protecting 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 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 sue you. Also, you’re almost protected from any legal trouble because you can prove you have insurance.

Stops You From Damaging Your Reputation

Similarly, lawsuits are always awful for your reputation. Construction workers always injure themselves, 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 happily recovers without worrying about their financial situation.

Therefore, your reputation remains intact. However, it would make the local news if you didn’t have worker’s comp and they filed a lawsuit. More people would hear of the incident, and your construction company would be painted poorly. 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 costs vary depending on numerous factors. However, 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 and, therefore, more chances of paying 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 feet 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 explaining the employees’ roles. 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 can have a tremendous impact on your premium—for instance, if you have many 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 want 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.


What is workers’ compensation, and why is it important in the construction industry?

Workers’ compensation is a form of insurance providing wage replacement and medical benefits to employees injured in the course of employment. It’s particularly important in the construction industry due to the high risk of injuries. This system ensures that workers are protected financially and receive necessary medical care while employers gain protection from lawsuits by injured employees.

Who is responsible for providing workers’ compensation coverage on construction sites?

Generally, it is the responsibility of the employer to provide workers’ compensation coverage. On construction sites, this can include general contractors, subcontractors, and in some cases, project owners, depending on local laws and the terms of employment contracts. Each state has specific regulations dictating coverage requirements.

What types of injuries and illnesses are typically covered by workers’ compensation in the construction industry?

Workers’ compensation typically covers injuries such as falls, burns, cuts, fractures, and other accidents directly related to the job. It also covers work-related illnesses that may develop over time due to exposure to hazardous materials or conditions, like respiratory diseases from inhaling dust or chemical exposure leading to skin or lung diseases.

How are workers’ compensation premiums determined for construction businesses?

Premiums for workers’ compensation in the construction industry are generally determined based on several factors, including the total payroll, the type of work being performed, the company’s claims history, and the safety record of the business. Riskier occupations typically face higher premiums, reflecting the greater likelihood of filing a claim.

What steps should construction workers take if they are injured on the job and need to file a workers’ compensation claim?

If a construction worker is injured on the job, they should:

  • Immediately report the injury to their supervisor or employer.
  • Seek medical attention as needed.
  • Ensure that the incident is documented accurately in the workplace injury log.
  • Complete and submit a workers’ compensation claim form, which can usually be obtained from the employer or the workers’ compensation board of their state.

What are the consequences for construction businesses that fail to provide workers’ compensation coverage or violate safety regulations?

Construction businesses that do not provide mandatory workers’ compensation coverage can face severe penalties, including heavy fines, criminal charges, and civil liabilities for any injuries that occur. Additionally, violating safety regulations can result in additional fines, increased insurance premiums, and, potentially, temporary or permanent closure of the business site.