Article: Workers' Comp for Home Inspectors: Everything you need to know

[InspectorPro Insurance]

Hi TIJ Readers!

Here's a preview of our latest article, which covers the ins and outs of workers' comp for home inspectors.

Enjoy!
Stephanie
 

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Several months ago, we were reviewing a home inspector's workers' compensation policy. Unbeknownst to that home inspector, their insurance carrier wasn't familiar with the property inspection industry. Despite their lack of experience in the inspection space, the carrier didn't want to turn the home inspector away. Instead, the insurance company categorized (or grouped) the home inspector in what they perceived to be the closest type of business they already insured: window blind installation.

With a window blind installer's workers' comp policy, the home inspection business lacked coverage for many of the unique risks their employees faced. For example, since there's no need for a window installer to mount a roof, the home inspection company didn't have coverage in case their employees fell off an inspection property's roof. Thus, by pairing up with a workers' compensation provider unfamiliar with their business, the home inspection company's needs were not being met.

What is workers' compensation insurance?

Since 2050 B.C., governments have granted sick and injured laborers payment after workplace accidents. Ancient Greek, Roman, Arab, and Chinese law all dictated precise payments for both bodily impairments and disabilities. Thus, their legislation laid the foundation for the workers' compensation insurance we have today. (For more on workers' comp's history, see Gregory P. Guyton's "A Brief History of Workers' Compensation" or AmTrust Financial's summary "The History of Workers' Compensation Insurance".)

Workers' compensation insurance provides employees who suffer from work-related injuries or diseases with access to medical and wage benefits. Unlike general liability (GL) insurance, which covers inspection-related bodily injury and property damage claims for non-employees, workers' compensation looks out for people who work for your company.

By covering job-related injury and illness costs, workers' comp protects both employees and employers. Employees work under less financial risk knowing they're protected on the job. Additionally, employers limit their liability and deter litigation.

Recognizing the need for workers' comp in the home inspection industry, we launched our own workers' compensation insurance program in June 2019. In this article, we go over some of the common questions inspectors do (and should!) ask when shopping for a workers' comp policy. We hope that the information outlined here can help you make an educated workers' comp purchase with us or another provider.

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[Jim Katen]

Since the vast majority of home inspectors run a one-person company, does worker's comp cover those single-person operations? Or is it just for inspectors who have employees? 

[Tom Raymond]

I've done this several times in NY. As an officer of a corporation (two person partnership S corp) I was eligible for coverage under the corporate comp policy, but only in my capacity as an officer. If I was injured unloading a truck my claim would have been denied. 

As a Sole Proprietorship, there are several instances where I might be required to have comp coverage, and a few where I am required to "opt in", but none where I am eligible for benefits. Additionally, having both comp and health insurance puts me in a position where both insurers could claim my injuries are the others responsibility. 

No thanks. 

[InspectorPro Insurance]

12 hours ago, Jim Katen said:

Since the vast majority of home inspectors run a one-person company, does worker's comp cover those single-person operations? Or is it just for inspectors who have employees? 

@Jim Katen: Great question. Since workers' compensation insurance is regulated by individual states, sole proprietorship coverage options and rules vary by state.

In many states, sole proprietors are exempt from workers' comp requirements but may choose to purchase coverage. Your state of Oregon is one of those states in which you are not required to purchase coverage but may if you want to. You can find more info on Oregon's workers' comp laws here.

Other states allow sole proprietors to opt-out of workers' comp coverage if they don't have employees. (i.e. Arizona, California) Also, there are a handful of states in which sole proprietors are exempt. To find out exactly what the regulations are for your state, I'd recommend talking to an insurance broker or going to your state's government website. NFIB has good summaries of requirements and links to the government websites here.

2 hours ago, Tom Raymond said:

I've done this several times in NY. As an officer of a corporation (two person partnership S corp) I was eligible for coverage under the corporate comp policy, but only in my capacity as an officer. If I was injured unloading a truck my claim would have been denied. 

As a Sole Proprietorship, there are several instances where I might be required to have comp coverage, and a few where I am required to "opt in", but none where I am eligible for benefits. Additionally, having both comp and health insurance puts me in a position where both insurers could claim my injuries are the others responsibility. 

No thanks. 

@Tom Raymond: Not sure who's providing you with that workers' comp info, but it's incorrect. Regardless of whether you're an officer of a corporation or a standard employee, work-related injuries or illnesses are eligible for workers' comp coverage. If you were injured unloading your truck in relation to your home inspection business, your workers' comp claim would be covered.

Even if your workers' comp provider mis-categorized you as a clerical/admin employee, workers' comp is a no-fault insurance. That means that it would be the insurance company's job to cover the claim anyway and, if necessary, bill you whatever difference in cost to re-categorize you properly.

The only reason I could see a workers' comp claim regarding a truck unload being denied would be due to a pre-existing condition. If, for example, you have a history of back injuries and problems, and then you strain your back unloading the truck, the claim could get denied because of your past medical issues. However, your health insurance should then pick it up so long as you don't have any prohibitive exclusions for pre-existing conditions within your health insurance coverage.

In regards to your concern about your workers' comp and health insurance competing to cover (or not cover) claims, they're meant to address different issues. Any injury/illness on/from the job--so long as it isn't a pre-existing condition--should go to your workers' comp policy. All other injuries/illnesses that happen outside of your job--including pre-existing conditions--go to your health insurance policy. Each policy has separate responsibilities, so as long as you're sending your claims to the right place, there shouldn't be a coverage problem.

Hope that clarifies some of your concerns. If you want additional insight into how workers' comp works in New York State, I recommend checking out the WC Board's website here.

[Tom Raymond]

None of the private practices in my area are accepting new workers comp cases anyway. What good is insurance if no one will accept it?

I am exempt for about 90% of the work I do. I have resolved the vast majority of the remainder by becoming a w2 employee, making it someone else's problem.  Once or twice year, I take my chances. 

[InspectorPro Insurance]

3 minutes ago, Tom Raymond said:

None of the private practices in my area are accepting new workers comp cases anyway. What good is insurance if no one will accept it?

I am exempt for about 90% of the work I do. I have resolved the vast majority of the remainder by becoming a w2 employee, making it someone else's problem.  Once or twice year, I take my chances. 

When you say private practices, I'm not sure what you mean. Could you explain?

As for the W2 comment, depending on your state, the inspection companies for whom you work may still be required to or have the option to cover you as an independent contractor under their existing workers' comp policies.

[Tom Raymond]

Doctors. There are no doctors offices in my town, or any of the adjacent ones accepting new comp cases. They cost too much to administer, the don't reimburse enough, and what little they do pay takes 90 days or more to receive. 

[Les]

While I appreciate your view and take on the subject, you may be a little off on your interpretation of the law.  I think you are correct in most of your post, but to opine that a person may or not be covered is definitely up to the discretion of the individual state(s) and their regulators. 

I, as a sole proprietor, can not be covered, yet must have coverage in place - in Michigan.  

[Tom Raymond]

55 minutes ago, Les said:

While I appreciate your view and take on the subject, you may be a little off on your interpretation of the law.  I think you are correct in most of your post, but to opine that a person may or not be covered is definitely up to the discretion of the individual state(s) and their regulators. 

I, as a sole proprietor, can not be covered, yet must have coverage in place - in Michigan.  

Exactly my experience in NY. I can be exempt, can be required to have coverage, and am ineligible for benefits. 

I have been the employer paying far too much for coverage, the injured employee suing for benefits (my attorney made more than I did), and the sole prop forced to comply with rules designed for companies 100x my size. 

I will take my exempt status whenever possible. 

[InspectorPro Insurance]

19 hours ago, Tom Raymond said:

Doctors. There are no doctors offices in my town, or any of the adjacent ones accepting new comp cases. They cost too much to administer, the don't reimburse enough, and what little they do pay takes 90 days or more to receive. 

This is an interesting dilemma. Let me reach out to our carrier to see if they've heard of this happening and if they know of any potential resolutions.

5 hours ago, Les said:

While I appreciate your view and take on the subject, you may be a little off on your interpretation of the law.  I think you are correct in most of your post, but to opine that a person may or not be covered is definitely up to the discretion of the individual state(s) and their regulators. 

I, as a sole proprietor, can not be covered, yet must have coverage in place - in Michigan.  

 

4 hours ago, Tom Raymond said:

Exactly my experience in NY. I can be exempt, can be required to have coverage, and am ineligible for benefits. 

I have been the employer paying far too much for coverage, the injured employee suing for benefits (my attorney made more than I did), and the sole prop forced to comply with rules designed for companies 100x my size. 

I will take my exempt status whenever possible. 

Thanks, Les. You're right in that the states dictate workers' comp regulations while the  insurance companies simply provide the coverage. (Hence the table referencing state governing bodies in the article.)

However, in regards to @Tom Raymond's issue in NY where he's experiencing coverage denials (or being told that denials will occur) in relation to truck unloads and health insurance: I actually reached out to the underwriter to ask about corp. officer coverage in NY, and he's the one that said it should be a non-issue. But perhaps, he misunderstood my question. Let me go back and see if he's familiar with sole proprietor coverage restrictions in NY and MI.

[Les]

your response is one of the many reasons I like you. 

 

[InspectorPro Insurance]

On 6/21/2019 at 5:39 AM, Les said:

your response is one of the many reasons I like you. 

 

Thanks for your confidence, @Les. Les and @Tom Raymond, I'm still waiting to hear back on some of the details discussed below, but here's what I've learned so far.

Our workers' comp underwriter couldn't find anything that limits officer coverage. According to him, if you elect coverage, then you should be covered if you're injured. Even if you weren't classified properly, that could be corrected during an audit.

The only thing that the underwriter could think of that would have caused an officer to simultaneously have and not have coverage is a "ghost" policies. In a "ghost" policy, an officer or owner elects coverage to get a certificate to meet a contract requirement. But, simultaneously, that officer waives their own coverage. We don't write those kinds of policies, but some providers do. So, maybe that was what you were experiencing?

If that info on officer coverage still isn't sounding right, we can look into it further, but we'd need more info on your specific situation. If you'd like to chat, I'd suggest scheduling a call with our workers' comp team, which I can help arrange for you.

As for the provider issue, we went ahead and reached out to location-specific claims managers in the workers' comp space to get their take. The claims manager we contacted in Vegas said that, in Nevada and most state she's aware of, there can be issues of wait times for new cases. However, she also stated that, if providers near the injured inspector won't accept them, inspectors can go to the nearest place that will and the claims adjuster will pay the mileage and per diem.

We're looking into whether that info on the provider issue is the same for MI. I'll keep you posted.

Hope that information is useful!

[Tom Raymond]

I'm with Les. I'm impressed, but I'm not likely to buy any more insurance than I already have. 

[InspectorPro Insurance]

14 hours ago, Tom Raymond said:

I'm with Les. I'm impressed, but I'm not likely to buy any more insurance than I already have. 

I respect that. If you do end up reconsidering workers' comp--whether you purchase with us or elsewhere--feel free to reach out with any questions you might have.

[InspectorPro Insurance]

Okay, @Les and @Tom Raymond. I finally heard back from that claims adjuster in MI. So, as promised, here's what they had to say:

When it comes to medical providers not taking on new workers' comp clients, our MI adjusters would refer insureds to another city. The adjusters also have relationships with third party vendors and nurses, so they'd have those vendors and nurses reach out to providers to see if they could establish a relationship that would allow insureds to get care in more convenient locations. In short, if you were having trouble getting picked up at a local provider, you'd reach out to your workers' comp provider to get help either getting in or going elsewhere.

That should answer all the questions in the discussion above. Let me know if any more come up.