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Avoiding the pitfalls of workers’ comp

Avoiding the pitfalls of workers’ comp

By Tim O’Bryan

INSURANCE BASICS ICONThe continuing series with Tim O’Bryan, president of Service Insurance Agency, Richmond, VA, now focuses on workers’ compensation claims – specifically, the pitfalls of workers’ comp and how motorcoach operators can avoid them.

What’s one of the biggest pitfalls that motorcoach operators don’t foresee when dealing with workers’ compensation?

Tim O’Bryan: I often see operators confusing contracted workers with employees. The term “contracted” almost implies that they’re not really employees. The fact is, if you give someone a coach and tell them where to go with it, they’re an employee. Regardless of what the contract says, operators need to adjust their payrolls accordingly.
In the motorcoach industry, we really don’t have independent contractors in a true sense – not like there are in the trucking business. In trucking, the contractor might own the vehicle and not the load. On the bus side, there’s no true independent contractor so anyone driving your bus needs to be covered under workers’ comp.
Workers’ comp has nothing to do with full-time, part-time or seasonal employment. It’s driven by payroll. It’s all well and good to separate your employees that way, but the your workers’ comp carrier just wants to know total payroll.
Every state is different as to when you’re required to have workers’ comp. With some states, it’s three employees and the owner is counted in that. In other states it may be more or less. You need to know what your individual state requires. If you only have two people and the states say three, that’s fine. You can still be held liable for that person’s injuries. The only exception is an operator who owns the company, drives the bus, answers the phone and completes all maintenance by himself.
Everybody’s got somebody in the office that answers the phone – even if it’s just a family member who doesn’t take a salary. There’s always someone in the garage so, before you know it, your company already has four or five employees. For this reason, it’s extremely important to know your state’s individual statutes.
Operators with locations in different states must be sure to stay abreast of workers’ comp requirements in all of those states. Tell your agency, at the beginning of the policy, about all of your locations and make sure you’re covered properly.

How important is payroll upkeep to understanding workers’ comp?

O’Bryan: Workers’ comp is a premium based on total payroll, and it’s divided into different classes, depending on the class of employees you have. Every state is different and the state sets the rate.
Using the right payrolls is extremely important. Do yourself a favor and don’t monkey around with the payrolls. Don’t try to save money on that, because your workers’ comp carrier is going to get you on audit. Be reasonable, look at what you have on the books and don’t cut corners.
In the motorcoach industry, we borrow and/or subcontract buses during the year depending on seasonal needs. Always get a certificate of insurance from the operator you’re borrowing from to make sure they have workers’ comp.
Anyone you’re doing business with must provide you with a certificate of  insurance. Keep these certificates in your workers’ comp file, because auditors may come in and ask for them. If you have the certificates, the auditor will likely move along. If not, they’ll start to ask more questions which could lead to additional premium.

Tim O’Bryan serves as president of Service Insurance Agency. Since 1952, the company has been committed to the transportation industry. Service Insurance Agency strives to provide the most knowledgeable advice and personal service to all of its valued customers. Visit them online at www.serviceins.com.

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Posted by on Sep 22 2016. Filed under Features. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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