Workers’ Compensation is one of the most important types of insurance that excavation contractors can have if you have employees. That’s because moving the earth and rock and preparing land for a construction project isn’t without risks to your workers.
Because excavation work has more hazards than the average job, you want to ensure that your employees are protected just in case they’re injured while working for you or in case they encounter an environmental exposure that jeopardizes their health.
Let’s delve a little bit deeper into Workers’ Compensation insurance. Explore our guide to help you gain a thorough understanding of the factors involved and what it means for your excavation business.
Workers’ Comp – What’s Covered and What’s Not
Let’s clarify which types of claims are typically covered under Workers’ Compensation and which ones aren’t.
- An employee’s loss of wages when they’re unable to do their job
- Medical bills and expenses for workers who are injured while working
- Disability for long-term injuries
- Benefits for your employee’s survivor if they die from an injury or exposure on the job
What May Not Covered
- Injuries that arise from illegal action
- Injuries due to drug or alcohol use
- Injuries that occur as a direct result of violating your company’s rules
- Injuries that occur outside of your employee’s work with you
Why do Excavators Need Workers’ Compensation?
For one, most states require that companies who hire employees carry Workers’ Comp insurance.
But, perhaps a better reason is that excavation worksite accidents are quite common. Cave-ins, falling loads and falls, trenching accidents, toxic exposures, and utility line breaches are the five most common safety hazards for excavation workers.
Workers’ Compensation is a buffer that keeps you from bearing the burden and cost when one of your workers is injured during your business’s operations. It helps replace a portion of your workers’ wages and pays for medical treatment for work-related injuries and illnesses.
Workers’ Comp is a well-established system that allows your workers to be taken care of as they mend and recuperate from an accident or illness they receive while working for you. In turn, it minimizes the financial risks for your excavation business.
Consider the alternatives. Without Workers’ Comp, your worker could decide to sue you to recover their lost wages and pay for the medical bills related to their work accident.
Without timely medical treatment, your employee would likely be out of work longer, leaving you shorthanded or having high turnover rates. Neither of those scenarios would benefit your business.
So, Workers’ Compensation provides an advantage to you as a business owner and your workers. Your employees are guaranteed a seamless process to help them recover and get back to work faster while assisting them in meeting their financial obligations in the interim.
Workers’ Comp Examples for Excavation Contractors
Workers’ Comp helps workers to feel as though they’re taken care of and valued, making it more likely for them to return on the job sooner. It also helps avoid animosity between an injured worker and an employee, thus making it less likely that a worker will sue for damages.
To better help you understand how Workers’ Comp works, here are a couple of possible scenarios.
Workers’ Comp Scenario #1
Imagine your worker is on a backhoe, working an extremely unlevel ground. At one point, the machine overturns, pinning your employee and crushing him. Thankfully, your worker survives but has some serious injuries that need immediate medical attention. Your worker spends a couple of weeks in the hospital, then must recuperate at home for another six weeks or so. The accident was something that could have happened to anyone, even with the best training. In the meantime, your worker still has a family to provide for and bills to pay, not to mention the tens of thousands of dollars in medical bills that arose from the accident. Workers’ Compensation would cover your worker’s medical bills and much of his lost wages while off from his job duties as he’s recovering.
Workers’ Comp Scenario #2
Consider that you have newer, lesser trained workers at the worksite. One of your younger employees isn’t as alert as he should be. At the same time, one of your trained workers is operating an excavator, while your newer worker is slightly out of viewing range but too close to the heavy machine. The excavator machine strikes the young worker, and they fall into the deep trench that is being dug up. Unfortunately, the worker dies from the combination of the blunt-force trauma and the fall. Workers’ Comp would pay the young man’s wife and baby survivor’s benefits.
Workers’ Comp Scenario #3
Unbeknownst to you or your employees, your workers are excavating a site that previously had toxic chemicals dumped and buried. Soon after digging, many of your workers are overcome with the residual toxic fumes and become ill. They’re transported to the hospital for treatment, and though they’re soon released, they must take a few days off from work. Workers’ Comp would pay for the medical treatment and ambulance ride they received, as well as reimburse them for some of their time off from work.
Workers’ Comp FAQ
How is Workers’ Compensation regulated?
Workers’ Compensation laws are regulated and mandated through the individual states. With the exception of Texas, almost every state in the U.S. requires employers to have Workers’ Comp on their workers.
Each state has its own rules regarding Workers’ Comp, along with exemptions and exceptions that are unique to their state. Very few states have the same regulations concerning their Workers’ Comp laws.
Each state decides the monetary benefits to workers, which injuries or impairments are covered, and how the worker is to receive medical care.
Individual states also determine how the claims should be handled, how to resolve disputes when they arise, and cost-control solutions. For instance, some states might allow nearly unlimited chiropractic care, while others may only allow very few visits or none at all.
Is it an absolute requirement that I have Workers’ Comp insurance?
In many states, if your excavator business is considered a partnership or a sole proprietor and you don’t have employees, you aren’t required to have Workers’ Comp.
But if you have employees that don’t have ownership in your business, you’re required to obtain Workers’ Compensation insurance for your workers.
Also, if you have workers who are paid by commission rather than a salary, some states won’t require coverage for those workers.
In addition, some states exempt employers who only have a few employees. Some states mandate coverage if you have three employees, while others don’t require coverage unless you have five or more employees.
It’s highly recommended that you become familiar with your state’s statutes regarding Workers’ Compensation. You might also consider speaking with an experienced excavator insurer who understands your state’s laws and can shed more light on your Workers’ Comp responsibilities.
But, it pays to remember that regardless of the law, if you don’t have coverage on your workers and something happens to them while working for you, your business could be held liable for their injuries or death. This could potentially bankrupt your business.
How are my premiums determined?
Many states utilize a class code system by the National Council on Compensation Insurance, or the NCCI.
There are around 800 class codes that insurance companies use to properly categorize workers in each industry.
Premiums are often based on these Workers’ Compensation class codes, along with the amount of payroll you have. The more risks and dangers that are associated with your business, the higher the premiums are likely to be.
Unfortunately, excavation contractors have a higher risk, so you may pay higher premiums than an accounting firm, for instance.
The location of your business is also a factor. If your business is in an area with more catastrophe-like situations, again, your premium could be higher.
But, once your business has achieved a certain level, your business’s claims history can impact your premiums. If your company has fewer claims, it will likely be eligible for discounted premiums.
Is there a way to lower the premiums for my excavation business?
Absolutely! The first thing you can do is manage your risks so that your business is proactive in preventing accidents and reducing excavation hazards, and therefore, Workers’ Comp claims for your business.
Also, because your excavation business likely needs several types of small business insurance, such as general liability coverage, commercial vehicle coverage, and others, talk to your insurer about bundling coverage to offer you a reduced rate for all of your various insurances.
You’ll also want to make sure to work with an insurer who understands class codes so that your premium is figured correctly.
Finally, in order to manage your insurance premiums, you can raise your deductibles for lower-risk types of insurance. As your business grows and your budget allows, you can then lower those deductibles.
Sometimes, accidents and workplace incidents occur even when you have the best safety programs and the most experienced employees.
As an excavation contractor, it’s vital that you have the best Workers’ Comp insurance in place to help minimize the financial risks to your business if something does happen.
Regulatory requirements also exist across the U.S. to protect workers, particularly those who work in higher-risk industries, like the construction and excavation industries.
Workers’ Comp is vital for you and your employees and benefits everyone. You can manage the cost of having coverage by choosing an insurer who will bundle your commercial insurance coverage.
It’s also wise to consult a specialized insurer such as NIP Group, which works with excavators exclusively and understands how to guide you to help manage your financial risks.