Workers Compensation

[alpha]

This is a legal, not political question. A recent posting about the high cost of medical treatment made me think about this situation that happened in our community.

A homeowner hired a Fireman to replace his roof on his off days. Most firemen that I know work part-time to supplement their income. The firemen fell and injured his back incurring very high medical bills. His medical coverage was with the city.

The city has a self-insured medical plan with a third party administrator. They rejected his medical claim saying he should have been covered under workers compensation since he was working at another income producing job when he was injured.

As a result, the fireman had no medical coverage for his injury. He was a one-man show and people in the community had fund-raisers to help cover his medical expenses.

As a practical matter, most handymen running a one person business cannot afford the cost of workers compensation insurance. If they added that insurance cost to their estimates, they would not have many customers.

Many of the one person handyman operations advertise they are "licensed and insured." In checking with them, they usually have a city license that "enables" them to pay taxes, and they carry a liability policy to cover them for their mistakes.

This raises several questions.

1. Is the handyman "self-insured" for this risk with no medical insurance unless he has workers compensation insurance?
2. What is the homeowner's risk? My homeowners insurance includes only liability and not workers compensation.

Any thoughts?

Bob

[os1kne]

I'm not an expert, but I believe in this instance, the handyman (fireman) would be self-insured (or uninsured, depending on your perspective) for the injuries that he sustaining in his self-employment venture.

Unless the handyman signed a waiver of liability, I do believe that the homeowner and/or the homeowner's insurance company have an obligation to pay the handyman's medical expenses.

If you were to hire a contractor/handyman to repair your roof, etc. - you should make sure that THEY have insurance to cover any injury that they may sustain while working on your property - or hire someone who does. You don't want to hire a handyman for a $5k job and have that handyman get injured and file a claim on your homeowner's policy that could easily be several hundred $K - possibly exceeding your coverage limit, making you individually liable for the shortage. Worker's compensation insurance, like most types of insurance, isn't cheap - but it's well worth the cost when you need it.

If the handyman had just been a buddy helping out and not getting paid, his medical insurance would likely cover his medical expenses, but the medical insurance co. would likely subrogate against your homeowner's insurance.

I could be wrong, but I think that's how it works.

[Warren]

I think you covered the situation well. The "handyman" took a calculated risk and came out on the losing end. His choice.

I suspect he could find an attorney willing to sue homeowner and the homeowner's insurance company. The attorney would probably base his suit on the state of the roof the man was hired to replace. Crazy world. The homeowner took a calculated risk and may pay the piper for his bad choice.

I just had my roof replaced, cost 5 figures. Never gave a thought to having a non-professional do it just to save money. The leak that appeared in a heavy rain a week after the roof was replaced was fixed under the warranty within 24 hours.

I might hire an itinerant handyman to repair my shed roof, not the roof of my primary domicile. Too risky.

[Uncle Cracker]

I have a 1-man business, and I am not required to carry workman's comp on myself.

[os1kne]

Depending on your business, it may be a good idea to get a w/c policy - regardless of whether it is required. Many, if not most, small business owners that don't have employees don't carry w/c insurance, because they aren't required to. Even those that have a w/c policy, will often get a policy that excludes the owners - which may be fine depending on the business.

If you're a lawyer or doctor, etc. where you are very unlikely to become physically injured in the course of business, then I'd say there's no harm in not having w/c insurance. But, if you're a roofer, window-washer, etc. you'd be foolish not to have w/c insurance. Most people are going to be doing work that has a risk level that falls somewhere in between and need to decide for themselves whether the cost is worth the risk.

[crokett]

Why is the insurance co rejecting his claim? He got hurt. As far as I know if I am in an accident or plane crash or whatever on job related travel, my insurance does not require me to file under workman's comp.

[Uncle Cracker]

Why is the insurance co rejecting his claim? He got hurt. As far as I know if I am in an accident or plane crash or whatever on job related travel, my insurance does not require me to file under workman's comp.

Exactly. My insurance company has never asked me whether I got injured on the job, moonlighting, or on my own time. It does not seem right that they would need to know.

[os1kne]

It could be something as simple as his wife checking the box on the form at the hospital that asks "is this a work-related injury?". (The handyman was probably in no condition to be preparing paperwork.)

When the medical insurance co. gets the large bills from the hospital for providing medical services - they will ask for a copy of the admission form and see that it was a work-related injury - so they subrogate against the worker's comp carrier (the medical ins. co doesn't want to pay for anything that they can assign to someone else).

The city's worker's comp. carrier says "he didn't get hurt working for us", so we're not paying...The medical ins. co. asks "then who was he working for when he sustained these work-related injuries?"-and Joe gets stuck with the bills.

Or, in a small town, it could be as simple as the paramedic picking up the injured fireman and asking the homeowner what happened. Everyone knows everyone in a small town, especially with cops and firefighters, so it doesn't take long for the story of "Joe falling off the roof while moonlighting" to make it to someone at the city that doesn't think that the city should pay substantial medical bills arising from Joe's moonlighting misadventure.

If Joe had fallen off of his own roof, his medical ins. co. should pay the bills without a problem. I think the fact that Joe works for the city, and the city is self-insured worked against him.

[cgallery]

My recollection from when I hurt my back on the job (no workman's comp) was that my insurance company rejected the claims based upon the fact that it should be covered by workman's comp. When they were notified no workman's comp, they were required to pay every cent that they normally would.

[jonmulzer]

Simple explanation and works for 99% of all "why" questions regarding insurance. Insurance companies business plans are based upon getting as much money from you as they can and giving as little of it back as they can get away with. If I thought it would not turn out like all other forms, I would think that Insurance Insurance would be a good idea. They will lie, cheat and steal to keep the money that they should pay out.

[iceman61]

I have a 1-man business, and I am not required to carry workman's comp on myself.

Same here. And if you sub-contract work out, the sub-contractor is responsible for his own workman's comp. (here anyway)

[alpha]

Each state has it's own Workers Comp. law so the regulations vary widely.

Most people assume their medical insurance covers them 12/7 under all conditions. You know what happens when you assume something. Most medical insurance has exclusions (like life insurance). Usually you don't have a problem for an illness, but an injury is another case. You must always fill out details of injuries for insurance. For injuries, insurance companies are looking for ways to shift or recover the cost of the claim.

The fireman, assumed he would be covered under his medical plan. He claimed the city did not explain the plan. The city claimed he must not have been paying attention when the policy was explained, and further he did not read the actual policy. The city later said they would do a better job in covering the explanation of the plan. Since the issue has died down, I suspect the city "quietly" paid the claim.

Upon further investigation, in our state, a single proprietor is not required to carry Workers Comp. Also excluded is a remodelling job of less than 20 consecutive days. (I am not sure what "20 consecutive days" means but that is what the law says). Sometimes I think laws are written in vague language to give employment to lawyers!

My main concern was find out what risk exposure the homeowner has when hiring a contractor, and the contractor also needs to consider the risk.

[dkerfoot]

I am self-employed also.

Good explanations here but I would add that if the contractor identified himself has being insured/bonded/whatever then he would have a hard time suing the homeowner and their insurance.

If the homeowner hired him without any representation of insurance, it becomes a different story.

[Adele]

Ok as an insurance agent I must put my thoughts in. As others have said this is a state by state situation. As a homeowner/ insurance agent I do not recommend letting anyone work on your property without proper liability insurance and health insurance. Every homeowners policy that I have ever seen exclude anyone hired to do a job on the property. I recommend getting a certificate of insurance for the liability portion and a signed and notrized letter stating you are not liable if the person gets injured.

I agree that his health insurance provider should have paid regardless if he was on the job or not. However, every state has different laws regarging these kinds of issues. That is why it is soooooo important to know what kind of insurance you have and visit with your agent on a annual bases. If this guy would have done that a Good agent would have told him he did not have any health coverage in this situation. I deal with this often.

For you guys that are self employed make sure you visit your local insurance agent soon and make sure you have the coverage you need. I HIGHLY recommend someone face to face not on the phone. The local agent will know more of your area laws than someone who lives someplace else and is reading things from a manual.

Just my 2 cents,
Adele